COMMISSIONER OF WEALTH TAX Vs. W DORAISAMY

JUDGEMENT

(1.) THE assessee claimed assessment under s. 7(4) of the WT Act, 1957, before its repeal and substitution by the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1st April, 1989. THE CWT, however, exercised the power under s. 25(2) of the Act, called for and examined the records of the proceedings, found that the order passed by the Assessing Officer(AO) was erroneous and prejudicial to the interests of the Revenue and after hearing the assessee and enquiry set aside the assessment order and remitted the matter to the WTO (the assessing authority) to redo the assessment in accordance with law. THE assessee appealed to the Tribunal. THE Tribunal has set aside the CWT's order and restored the assessment. THE Revenue has since obtained a reference under s. 27(1) of the Act on the question whether, in the facts and in the circumstances of the case, it can be said that the house was exclusively used by the assessee for residential purposes throughout the period of 12 months immediately preceding the valuation date relevant to the wealth-tax asst. yr. 1976-77. THE words in s. 7(4) of the Act, as the provision existed before its substitution by the Direct Tax Laws (Amendment) Act, 1989, are retained more or less in sub-s. (2) of s. 7 and the expression, the value of the house belonging to the assessee and exclusively used by him for residential purposes throughout the period of 12 months immediately preceding the valuation date may, at the option of the assessee, be taken to be the price which, in the opinion of the AO, it would fetch, if sold in the open market on the valuation date next following the date on which he became the owner of the house, or on the valuation date relevant to the assessment year commencing on the 1st day of April, 1971, whichever valuation date is later, provided that where more than one house belonging to the assessee is exclusively used by him for residential purposes, the provisions of this sub-section shall apply only in respect of one of such houses which the assessee may, at his option, specify in this behalf in the return of net wealth is the same even after the substitution except that the word "price" is substituted by the word "value" and the words following the word "price" are changed to read, "determined in the manner laid down in Sch. III as on the valuation date", other following words being retained. THEre has been no illusion at any time in the mind of the Courts as to the meaning of the expression "exclusively used by him for residential purposes throughout the period of 12 months immediately preceding" THE Tribunal, by the words with which it has stated the law, has found no difficulty in interfering with the order of the CWT. THE CWT, while setting aside the assessment order, observed as follows : "In completing the assessment as above, the WTO overlooked the fact that the assessee was a non-resident and was away from India from 11th Aug., 1972, onwards and his stay in India was only for a brief period of about a month from 27th Oct., 1975 to 24th Nov., 1975. THE WTO did not appear to have applied his mind and considered whether all the conditions laid down by s. 7(4) of the WT Act, were satisfied. For example, one condition is that the property should have been exclusively used by the assessee for residential purposes.THE WTO had not seen whether this condition was satisfied.... It was contended that the assessee had kept the house property for his own dwelling even though he was away from India. According to the representative, so long as the house was kept for residential purposes and was not let out for a period of twelve months before the valuation date, it should be taken as adequate for satisfying the provisions of s. 7(4) of the WT Act. It was explained to the assessee's representative that while completing the assessment on 25th Feb., 1977, the WTO had not actually considered the fact that the assessee was away from India for a major portion of 12 months immediately preceding the valuation date and was not actually occupying the residential house and on that score, the assessment was prejudicial to the interests of the Revenue. THE representative saw the force of this argument and agreed that he has no objection to the assessment being set aside. He, however, added that a full opportunity should be given to him to establish during the reassessment proceedings that the house was exclusively used for residential purposes of the assessee and that the conditions necessary for applying the provisions of s. 7(4) of the WT Act were satisfied in the assessee's case.".

(2.) THE Tribunal has, however, stated as follows:"THE CWT is certainly not right in the view he held. Even if the assessee is away from India for such long periods, it is still a house belonging to him and exclusively used by him for residential purposes throughout the period of 12 months immediately preceding the valuation date. It has not been let out on rent. It is also not used for commercial purposes. THE father and mother are not staying there in the house as of right but only out of filial love and affection. Only if the house is let out for rent or used for commercial purposes or if others are also staying there as of legal right it could be said that the house is not exclusively used for residential purposes. It may also be noted that the assessee was residing in this house from 25th Oct., 1975 to 24th Nov., 1975, which is a period falling within the period of 12 months immediately preceding the valuation date. We need not discuss that issue further. CWT vs. B. M. Bhandari 1980 (123) ITR 554, 1980 (14) CTR 18, 1979 (2) TAXMAN 162: 1980 (123) ITR 554, 1980 (14) CTR 18, 1979 (2) TAXMAN 162 (AP) fully supports the stand of the assessee. Further the Commentaries to the Estate Duty Act by D. H. Nanavathi, Third edition, at page 456 (s. 33 of the Act), also fully supports the stand of the assessee.".

(3.) THE Andhra Pradesh High Court judgment referred to a judgment of the Delhi High Court in CWT vs. Mrs. Avtar Mohan Singh 1972 (83) ITR 52 (Del), wherein it was held that the physical residence of the family of the assessee without any legal right to share the use of the house by the assessee does not come in the way of exclusiveness of the use of the house by the assessee.