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Shiv NaraIn Chaudhari Vs. Commissioner of Wealth-tax - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtAllahabad High Court
Decided On
Case NumberWealth-tax Reference No. 347 of 1972
Judge
Reported in[1977]108ITR104(All)
ActsWealth Tax Act, 1957 - Sections 5(1)
AppellantShiv NaraIn Chaudhari
RespondentCommissioner of Wealth-tax
Appellant AdvocateR.K. Gulati, Adv.
Respondent AdvocateDeokinandan and ;Ashok Gupta, Advs.
Excerpt:
- - ' 12. the claim of the assessee for exempting both the buildings situate in darbhanga castle and the building situate in mahatma gandhi marg, is clearly unsustainable. what seems to be clear is that the word has a distinct fluidity of meaning, and that it is best construed in relation to the context in which it is found, and in relation to the objects and purposes of the act or of the section of the act in which it is used. it is well settled that though a hindu undivided family is ordinarily joint not only in estate but also in food and worship, the members of such family need not have a common residence. the landlord failed to carry out the work required by that notice and the local authority carried out the work and called upon the landlord to pay the cost of such work under the..........no. 17/33, mahatma gandhi marg, allahabad the wealth-tax officer exempted only the portion of the house bearing door no. 92, but declined to exempt the other portion of the house bearing door no. 92-a, darbhanga castle, allahabad, and the building bearing door no. 17/33, mahatma gandhi marg, allahabad.4. in the successive appeals filed by the assessee, the decision of the wealth-tax officer on the question of such exemption was upheld by the appellate assistant commissioner and the tribunal.5. in its order the tribunal has observed, inter alia, as follows :'the fact that these houses bear separate municipal door nos. 92 and 92-a, itself shows that they were independent units of assessment and cannot be treated as one house. it is farther an undisputed fact that house no. 92 was built in.....
Judgment:

Chandrashekhar, J.

1. At the instance of the assessee, the Income-tax Appellate Tribunal, Allahabad Bench (hereinafter referred to as 'the Tribunal'), has referred to this court the following question of law :

'Whether house properties bearing the Municipal door Nos. 92, 92-A, Darbhanga Castle, and 17/33, Mahatma Gandhi Marg, Allahabad, occupied as residences by different members of the assessee-Hindu undivided family together constitute 'one house' belonging to the assessee and as such are exempt under Section 5(1)(iv) of the Wealth-tax Act, 1957?'

2. The material facts, as set out in the statement of the case, are briefly as follows: The assessee is a Hindu undivided family. It consists of four adult male members. They are living in four different independent residential units which are connected by a common passage in a building owned by them and bearing Municipal door Nos. 92 and 92-A, Darbhanga Castle, in Allahabad. A part of that building was constructed in the year 1960 and was assigned Municipal door No. 92. That building was extended in the year 1963 and such extended portion was assigned door No. 92-A. Two of the residential units are situate in the portion of the building bearing door No. 92 and the remaining two residential units, in the portion bearing door No. 92-A. The assessee-family also owned another building bearing Municipal door No. 17/33, in another locality, Mahatma Gandhi Marg, Allahabad. A part of that building was let out and a part of it was in the occupation of the assessee's family.

3. In the course of assessment for wealth-tax for the year 1966-67, the assessee-family claimed exemption under Clause (iv) of Sub-section (1) of Section 5 of the Wealth-tax Act, 1957 (hereinafter called 'the Act'), in respect of the value of the building bearing Municipal door Nos. 92 and 92-A, Darbhanga Castle, Allahabad, and the value of the building bearing Municipal door No. 17/33, Mahatma Gandhi Marg, Allahabad The Wealth-tax Officer exempted only the portion of the house bearing door No. 92, but declined to exempt the other portion of the house bearing door No. 92-A, Darbhanga Castle, Allahabad, and the building bearing door No. 17/33, Mahatma Gandhi Marg, Allahabad.

4. In the successive appeals filed by the assessee, the decision of the Wealth-tax Officer on the question of such exemption was upheld by the Appellate Assistant Commissioner and the Tribunal.

5. In its order the Tribunal has observed, inter alia, as follows :

'The fact that these houses bear separate Municipal door Nos. 92 and 92-A, itself shows that they were independent units of assessment and cannot be treated as one house. It is farther an undisputed fact that house No. 92 was built in 1960 and house No. 92-A in 1963 and they were independent of each other. On the basis of these facts we hold that the assessee is entitled to exemption only in respect of one house No. 92 and it is not entitled to any exemption in respect of the other house No. 92-A under Section 5(1)(iv) of the Wealth-tax Act.'

6. In this reference Shri R.K. Gulati, learned counsel for the assessee, contended that the portions of the building bearing Nos. 92 and 92-A formed only one house and that, as that house was in exclusive use of the assessee-family for their residential purpose, the entire building consisting of both these portions should have been exempted in determining the net wealth of the assessee-family. It was also contended by Shri Gulati that since the building bearing door No. 17/33, Mahatma Gandhi Marg, Allahabad, was also occupied by the assessee-family, the value of that house should also have been exempted in determining the net wealth of the assessee.

7. On the other hand, Shri Ashok Gupta, learned standing counsel for the department, argued in support of the view taken by the Tribunal.

8. To appreciate the rival contentions of learned counsel, it is necessary to set out the relevant provisions of the Act.

9. Clause (c) of Section 2 of the Act defines 'assessee' as a person by whom wealth-tax or any other sum of money is payable under the Act.

10. Section 3 of the Act, which is the charging provision, states, inter alia, that wealth-tax shall be charged in respect of the net wealth of every individual, Hindu undivided family and company.

11. The relevant portions of Section 5 of the Act, as it stood in the relevant assessment year, i.e., 1966-67, read as follows :

'5. (1) ...... wealth-tax shall not be payable by an assessee in respect ofthe following assets, and such assets shall not be included in the net wealth of the assessee--.........

(iv) one house or part of a house belonging to the assessee and exclusively used by him for residential purposes.'

12. The claim of the assessee for exempting both the buildings situate in Darbhanga Castle and the building situate in Mahatma Gandhi Marg, is clearly unsustainable. Even if both these buildings are used by the assessee-family for residential purposes, only one house can be exempted under Section 5(1)(iv) of the Act. These two buildings, namely, the one bearing Nos. 92 and 92-A, Darbhanga Castle, and the other bearing No. 17/33, Mahatma Gandhi Marg, are separate buildings situate in two different localities, and by no stretch of imagination they can be regarded as one house even if the assessee-family was using both those buildings exclusively for residential purpose. Moreover, a part of the building bearing door No. 17/33, Mahatma Gandhi Marg, has been held by the Wealth-tax Officer to have been let out.

13. The more important question is whether the two portions of the building bearing door No. 92 and door No. 92-A could be regarded as forming one house or whether those two portions constituted two different houses.

14. The word 'house' has not been defined in the Act. Of the several meanings of the word 'house' contained in Shorter Oxford Dictionary; the one appropriate to the context, in our opinion, is 'building for human habitation, especially a dwelling place.'

15. In ascertaining the meaning of the word 'house' for the purpose of this Act, the following observations of Lawrence J. in Annicola Investments Ltd, v. Minister of Housing and Local Government [1965] 3 All ER 850, 853, 854; [1966] 2 WLR 1204, 1211 are apposite:

'The precise meaning of the word 'houses' has frequently arisen for judicial consideration, but mostly in connection with other statutes or in other contexts. Decisions in relation to such other matters appear to me to afford very little, if any, assistance, to the determination of its meaning in this case. What seems to be clear is that the word has a distinct fluidity of meaning, and that it is best construed in relation to the context in which it is found, and in relation to the objects and purposes of the Act or of the section of the Act in which it is used.'

16. To attract the exemption under Clause (iv) of Section 5(1) of the Act the house owned by the assessee should be used by the assessee exclusively for residential purpose. In the present case the assessee is a Hindu undivided family consisting of four adult male members. Each of them is occupying one residential unit in the building bearing door Nos. 92 and 92-A. It is well settled that though a Hindu undivided family is ordinarily joint not only in estate but also in food and worship, the members of such family need not have a common residence. In other words, the family may continue to remain undivided even though different members of the family are residing separately. If a building otherwise comes within the meaning of the word 'house', the mere fact that different members of the Hindu undivided family who own that building, are living separately in different self-contained portions thereof, will not, in our opinion, constitute that building into many houses.

17. It is undisputed that both portions of the building bearing door Nos. 92 and 92-A, Darbhanga Castle, are contiguous to each other and are within a common boundary and a common compound. Though there are four residental units within that building, they are connected by a common passage and the building has unity of structure.

18. That the portion of the building bearing door No. 92 was built in 1960 while the other portion bearing door No. 92-A was built in the year 1963, would not have any relevance to determine whether both those portions together constitute a house. A house may be built in stages; a portion of it may be built in one year and another portion of it may be built after an interval of several years.

19. That one portion of the building bears one door number, while the other portion bears another door number and that these two portions are assessed separately by the municipality, are no doubt relevant circumstances in considering whether these two portions constitute one house or two different houses, but these circumstances are not decisive. The Tribunal has, in our opinion, attached excessive importance to these two circumstances.

20. As these two portions of the building are contiguous and situate in the same compound and within common boundaries and have unity of structure there is no reason why they should not together be regarded as constituting one house.

21. Bearing in mind the caution uttered by Lawrence J. in Annicola Investments Ltd.'s case [1965] 3 All ER 850 ; [1966] 2 WLR 1204 that the same word occurring in different enactments has to be given a meaning in relation to the context, the object and the purpose of that enactment, we shall advert to a few decisions in which the question whether a building in which there are several dwelling units, can be regarded as one house, was considered.

22. In Kimber v. Admans [1900] 1 Ch D 412 (CA) the facts were these : The plaintiffs were owners of two plots of lands forming part of a buildingestate, and had built a house on each of these plots. The defendant had purchased the two remaining plots in that building estate. He proposed to erect on those plots four blocks of residential flats. Each block was to contain two flats on the ground floor and two flats on the first floor. The plaintiffs pleaded that the defendant was bound by a covenant that not more than ten houses shall be erected on the said four plots. Cozens-Hardy J. had held that there was no breach of the covenant by the defendant and that the building of the nature which he intended to build was a dwelling house though each building was to contain a number of separate messuages. In appeal, while upholding that decision, Lindley M. R. observed (page 415):

'What does that (covenant) mean Does it refer to the mode in which the building to be erected is to be sub-divided or let, or does it refer to the aggregate of the rooms or whatever the contents of the building may consist of I think that the latter is the meaning. The house is the whole amalgamation......It applies, not to the interior portions of the building, but to the whole building.'

23. In Benabo v. Mayor, Aldermen and Burgesses of the Borough of Wood Green [1945] 2 All ER 162 (KB), the facts were these : The local authority in whose area a house was situated, served a notice upon its landlord to carry out certain specified repairs to various parts of the building. At the date of the notice the house was let to two separate tenants, one of whom occupied the ground floor and the other the upper floor. The house was not structurally divided, both tenants using the same entrance door, hall and internal corridor. The local authority had, however, rated the two parts of the house as separate dwellings. The landlord failed to carry out the work required by that notice and the local authority carried out the work and called upon the landlord to pay the cost of such work under the Housing Act, 1936. The landlord pleaded that the notice and the demand which followed it were not valid since separate notices and separate demands in respect of each tenement was required and that the landlord was entitled to know the cost of effecting the repairs for each of the tenements. It was held in that case that for the purpose of the Housing Act, 1936, the fact that the house consisted of two separate dwellings, did not entitle the landlord to separate notices in respect of each dwelling and that as the Act was concerned with 'houses' and not 'dwellings' only one notice was necessary in respect of the entire house and separate notices were not necessary in respect of each dwelling. Humphreys J. observed thus at page 164 : 'In fact, this was a house which was used by two separate families. The landlord, the person having control, had let certain rooms in the house to one person and certain other rooms to another person. Does that make the house two houses In my opinion, emphatically not. It remained one house. I think that is the answer, and a complete answer, to this point.'

24. In Okereke v. Borough of Brent [1966] 1 All ER 150 ; [1966] 2 WLR 169 (CA) the facts were these. A building containing three floors and a basement had been occupied at one time as a single house. Subsequently, it was divided into three separate self-contained dwellings which were rated separately. Two of these were each occupied by a different family and a third was occupied by members of more than one family. The respondent, Borough, had issued a notice to the owner of that building under Section 15 of the Housing Act requiring him to effect certain improvements. The owner challenged that notice on the ground that the property did not fall within Section 15 of that Act as the building was a mere collection of houses. The Court of Appeal by a majority decision held that the building came within the meaning of the word 'house' under Section 15 of the Housing Act. Salmon L.J. observed thus at page 158 (See also [1966] 2 WLR 169, 181 (CA)) :

'Indeed, in my view it is wrong to hold, if words have any meaning, that each tenement in a tenement block is a house. It may be, as counsel for the respondent suggests, that the occupier of a tenement sometimes refers to it loosely as his house, just as it is said figuratively that an Englishman's home is his castle. This, however, is beside the point, for it seems to me as impossible to hold that a single tenement is a house, as it would be to hold that a suburban villa is a castle.'

25. The aforesaid decisions also support the view we have taken, namely, that a house may consist of more than one self-contained dwelling unit and that if there is unity of structure, the mere fact that such self-contained dwelling units are occupied by different persons, will not make that house into several houses.

26. In the light of the foregoing discussion our answer to the question referred to us is partly in favour of the assessee and partly against it and is as follows:

'The house properties bearing Municipal Nos. 92 and 92-A, Darbhanga Castle (but not house No. 17/33, Mahatma Gandhi Marg) occupied as residences by different members of the Hindu undivided family together constituted one house belonging to the assessee-family and as such were exempt from wealth-tax under Section 5(1)(iv) of the Act, but the house bearing Municipal No. 17/33, Mahatma Gandhi Marg, Allahabad, was not so exempt.'

27. As the assessee has partly succeeded and partly failed, we direct the parties to bear their own costs in this reference.


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