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Wealth-tax Officer Vs. S.K. Singla - Court Judgment

LegalCrystal Citation
CourtIncome Tax Appellate Tribunal ITAT Chandigarh
Decided On
Judge
Reported in(1985)12ITD514(Chd.)
AppellantWealth-tax Officer
RespondentS.K. Singla
Excerpt:
.....appeals are common and each of the seven assessees held one-seventh share in a house known as 'singla house' under construction, the findings of the wto and that of the aac being the same in all the cases and the same being the grounds of appeals raised by the revenue and the same were the arguments of both the parties, the learned senior departmental representative, mr. r.k. bali, and the learned counsel for the assessee, mr. o.p. bansal, this group of seven cases was heard together and is being disposed of by this consolidated order for the sake of convenience.2. the common assessment year involved is 1979-80. in the original assessments, exemption was granted and, subsequently, under proceedings under section 17(1) of the act, cases were reopened and reassessments were framed by.....
Judgment:
1. The only dispute raised by the revenue in these appeals under the Wealth-tax Act, 1957 ('the Act'), pertains to exemption under Section 5(1)(iv) of the Act of a property built by the seven co-owners, viz., S.K. Singla, O.P. Singla, Deepak Singla, B.D. Singla, Sudhir Singla, A.K. Singla and V.K. Singla Since the facts in the background of these appeals are common and each of the seven assessees held one-seventh share in a house known as 'Singla house' under construction, the findings of the WTO and that of the AAC being the same in all the cases and the same being the grounds of appeals raised by the revenue and the same were the arguments of both the parties, the learned senior departmental representative, Mr. R.K. Bali, and the learned Counsel for the assessee, Mr. O.P. Bansal, this group of seven cases was heard together and is being disposed of by this consolidated order for the sake of convenience.

2. The common assessment year involved is 1979-80. In the original assessments, exemption was granted and, subsequently, under proceedings under Section 17(1) of the Act, cases were reopened and reassessments were framed by the WTO denying the exemption to all the assessees on the plea that the house in question styled as 'Singla house', in which all the assessees had one-seventh share, each unit belonging to each of seven co-owners, being neither habitable as a whole or in part, exemption was denied.

3. The AAC, when the reassessments under Section 17(1) came to be disputed before him, both in respect of initiation of proceedings and on merit, rejected the contentions of the assessee regarding initiation of proceedings but granted exemption to all the parties on merit, mainly observing that light, water and sewerage connections, so far as concerned with the house, were complete and even whitewashing of the rooms was over. It is this action of the AAC, which is disputed by the revenue before us.

4. The learned senior departmental representative, Mr. R.K. Bali, submitted that the house in question as a whole or in part, so far as seven assessees are concerned, was neither complete nor the same was habitable as in respect of the three assessees, i.e., O.P. Singla, Deepak Singla and S.K. Singla; Rs. 10,000 in respect of share of each one of them and Rs. 5,000 in respect of each of the four co-owners, B.D. Singla, Sudhir Singla, A.K. Singla and V.K. Singla, were spent after 31-3-1979, which was the date of valuation for the year under consideration. He submitted that the said amount was spent on whitewashing, painting, fixation of windows and window-panes, etc., in respect of which he mainly relied on identical letters written by all these assessees to the WTO on 12-8-1983, a copy of which he placed on the revenue's compilation and so far as law was concerned, he relied on the case of CWT v. K.B. Pradhan [1981] 130 1TR 393 (Ori.). He submitted that the house in question may be habitable for a chowkidar, rickshaw-wala or for any man of small means but not for the assessees, who in all invested lakhs of rupees on the construction and share of each one of them, so far as investment was concerned, exceeded over a lakh.

5. The learned Counsel for the assessee, Mr. O.P. Bansal, on the other hand, beside relying on the orders of the AAC, submitted that even proceedings under Section 17(1) in these cases were invalid and assessments framed were null and void, but he was fair enough to admit that neither these assessees are in appeals nor in cross-objections and he agreed that all he could do in this respect was to support the orders of the AAC as a counsel for respondents. He also relied on K.B.Pradhan's case (supra) and submitted that in case this case is carefully pursued, studied and gone through, it supports the contentions of the assessees.

6. After taking into consideration the rival submissions and looking to the facts available on record, we are unable to confirm the finding of the AAC. All the assessees, in their identical letter dated 12-8-1983, have submitted as under : It is further submitted that as on 31-3-1979, the valuation date, 'Singla House' was almost complete. Some small works such as whitewashing, painting, fitting of window-panes and wire-netting, etc., were in progress and were nearer to completion.

They, however, submitted that the factum that the assessees occupied their respective shares in the said house in June 1979 was due to the fact that, that was an auspicious day. Against this letter, we are unable to appreciate the observations of the AAC, who mentioned in para 4 of his orders as under : ...It has been submitted that even the whitewashing of the rooms was over. The reason for not occupying the house in March 1979 was given that the auspicious day for occupying the house was in June 1979.

This actually is a misstatement of facts, on the basis of which the AAC accepted the contentions of the assessees. All the assessees, in their respective letters, have admitted that whitewashing has not been done and window-panes with wire-netting, etc., were not yet fixed. When we look to the house as a whole, and also in respect of portions built by all the seven co-owners on one side, and the factum that neither windows nor panes and wire-netting were fixed in the newly built house, besides whitewashing and painting was also not done till 31-3-1979. In the case of a newly built house, it is impossible to occupy the same and utilise it for residential purposes for even a man of ordinary means, what to talk of the assessees who in all invested over 7 lakhs of rupees in the property, as a whole when we really carefully go through the said decision of K.B. Pradhan's case (supra), cited by the learned senior departmental representative, which is also relied upon by the learned Counsel for the assessee, we are constrained to reverse the finding of the AAC. At page 395 of the report, what is mentioned reads as under : The word 'house' has no statutory definition and, therefore, it has to be given the common parlance meaning. The dictionary meaning for the words seems to be 'building for dwelling in, a building in general, a dwelling place'. It also conveys the meaning of 'abode, habitation, etc.' Though the concept of residence has been omitted from the provision by amendment, we are not prepared to accept the submission of the assessee's counsel that 'house' or 'a part of house' can cover a situation where the house is not habitable. We are prepared to go to the extent that if the house was once habitable and became uninhabitable on account of want of repairs, the exemption provision may yet operate. Where, however, the house is in the process of construction and, on account of the fact that it is not complete, has not reached a habitable stage, we do not think the concept of a house can be extended to cover such an incomplete construction. The submission of the counsel for the assessee that the use of the words 'a part of the house' has the meaning of an incomplete house is of no importance. Obviously, Parliament has intended to exempt a part of the house where the assessee's interest extends to a part of it. The concept of habitability is inherent in the word 'house' and unless it is habitable, the abode would not answer the commonsense meaning of a house. In the instant case, there is no clear finding by the Tribunal as to whether with the investment made during the two relevant years, the construction had reached a habitable stage.

Merely from the fact that something more remained to be done in the year beyond the two years in review, it may not be presumed that the house had not come to a habitable condition on the valuation dates.

While we do not agree with the assessee's counsel that habitability is not the test, we are of the view that the Tribunal would do well in recording a finding as to the substantial position of the construction on the two relevant dates. If it reaches the conclusion that the construction had reached a habitable stage, that would amount to a house and the exemption would be available. If, however, it is found that the incomplete house was not in a habitable condition during either of the years, it would follow that the exemption would not be extended and the assessee's claim would not be admissible....

With the above observations in the said case, the matter was referred to by the Orissa High Court back to the Tribunal. In the instant case, when we go through the letter written by all the assessees, it is clear, as per paragraph above quoted, that respective portions of all these assessees in question were not habitable, as neither windows, window-panes or wire-netting were fixed nor the same were whitewashed or painted. The learned Counsel for the assessee, even on asking of the Bench, was unable to cite any decision in his favour, except that he also relied on this very decision which unfortunately, if read as a whole, does not support the contentions of the assessees at all but instead supports the contentions of the revenue. Even on asking of the Bench again and again, he was not able to give a case contrary to the one relied upon by the learned senior departmental representative. We are afraid, in the light of the decision in CIT v. Smt. Godavaridevi Saraf [1978] 113 ITR 589 from the Bombay High Court, we are bound to follow the decision of the Orissa High Court, since that is the sole and singular decision on the issue.

Even in the course of the arguments, when it was put to the learned Counsel for the assessee by the Bench, as to how much shall be the expenses on whitewashing or panes, his unequivocal submission was that a thousand or fifteen hundred in each case. When we look to the three cases, those of O.P. Singla, Deepak Singla and S.K. Singla, we find Rs. 10,000 was subsequently invested in respect of their respective shares whereas in respect of B.D. Singla, Sudhir Singla, A.K. Singla and V.K.Singla, Rs. 5,000 each were further invested. In respect of these investments as well, the learned Counsel for the assessees submitted that it was more or less a bifurcation because in case of those, who were earlier debited for lesser amount, Rs. 10,000 were assigned. The total investment to complete the house ran into about Rs. 50,000, which was spent from March to June 1979. We are unable to appreciate the contention of the learned Counsel for the assessee that Rs. 50,000 is too small an amount as compared to investment of lakhs of rupees, when we look to the items on which the same was spent which were windows, window-panes, fixation of wire-net on the windows, whitewashing, painting, etc. Neither before the two lower authorities nor before us, it was asserted by anyone of the assessees that they ever slept in the said house even for a day before 31-3-1979. In respect of a newly constructed house, mere light and water connections could not be of any assistance to the assessee's case because both these connections are normally obtained before the construction is started or in the course of construction. So far as sewerage connection is concerned, it is wrong to say that any sewerage connection was there, in respect of this property, because it is situated at Karnal and, as per the assessees themselves, there is nothing like sewerage connection at Karnal. All that they made was a septic tank which, of course, was made in the course of construction earlier. It is a fact of life, which cannot be denied, that in case of a new construction, though septic tank is made much before and provision is made for sanitary fittings yet the same are fixed and installed actually at the last moment in order to avoid breakage, rusting or getting the same spoiled by paint, etc. On the basis of facts and submissions made by the learned Counsel before the WTO, we are convinced that neither the house as a whole nor respective portions of the seven assessees was ready for occupation before 31-3-1979 and the same being not habitable, as observed by their Lordships of the Orissa High Court, the assessees were not entitled to get exemption under Section 5(1)(iv). The action of the AAC is, therefore, reversed.


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