ORDER
Vimal Gandhi, Judicial Member
1. In all these appeals a common point is involved and, therefore, they were heard together and are being disposed of by this consolidated order for the sake of convenience.
2. The only question involved in these appeals is whether the assessee is entitled to exemption under Section 5(1)(iv) of the Wealth-tax Act, 1957 (‘the Act’) in respect of non-residential building. The WTO had allowed the above exemption to the assessee. The AAC, during the course of appellate proceedings enhanced the assessment under Section 23 of the Act by withdrawing the above exemption. The assessee has one-seventh share in the property known as ‘Gita Chamber’ situated at AB Road, Indore. The property is a multi-storeyed building having open halls with attached toilets and W.C. Originally, the municipal corporation had approved the plan of this building as residential building. However, the building as per the AAC was not completed according to the approved plan and was let out for running offices. After some dispute with the municipal corporation, property was got approved as property having ‘commercial character’. It is presently being used as ‘office’ and ‘show room’, etc. In denying the above exemption to the assessee the AAC relied on several circumstances which chiefly are as under :
(i) Explanatory note amending Section 5(1)(iv) by the Finance (No. 2) Act, 1971, with effect from 1-4-1972.
(ii) The word ‘house’ is not defined in the Act, but on the basis of decisions of the Allahabad High Court in the case of Shiv Narain Chaudhari v. CWT [1977] 108 ITR 104 and the Orissa High Court in CWT v. K.B, Pradhan [1981] 130 ]ITR 393, concept of house presupposes that the building should be meant for human habitation.
(iii) As per the AAC, ‘building’ is a wider term and may ‘include’ house as well, but converse is not true. User of building is not material.
(iv) When common parlance meaning is to be given to the word ‘house’ commercial buildings are clearly excluded from exemption under Section 5(1)(iv).
(v) Other expressions used by the Legislature in Clauses (i), (ii), (I’M’) and (xxxi) of Sub-section (1) of Section 5 and Section 7(4) of the Act, make it clear that exemption under Section 5(1)(iv) is available only to a property which is residential in character or is basically meant for human habitation and the exemption under the above clause does not extend to office premises, godowns, factory buildings, theatres and the like. The assessee is aggrieved and has come in these appeals.
3. Shri M.C. Mehta, the learned counsel for the assessee, argued that the building in question has all the facilities of a ‘house’, has attached bathrooms and toilets, possesses structures which is of permanent nature and can be used both for residential as well as for commercial purposes and, therefore, there is no reason to treat the above building as not covered by the term ‘house’ employed in Clause (iv) of Section 5(1). According to Shri Mehta, the AAC has put a very narrow construction on the word ‘house’ and is clearly in error in holding that only buildings meant for human habitation are entitled to the exemption. According to him, even buildings used for commercial purposes are entitled to exemptior nuned the above clause. He relied on the circular letter F. No. 317/23/73/WT dated 24-7-1973 issued by the Board. Shri Mehta further argued that wherever the Legislature intended to restrict the benefit of exemption to residential houses only, it has specifically provided so, as is the case under rule IBB of the Wealth-tax Rules, 1957, or in provisions of Section 7(4). Shri Mehta strongly relied on the decision of the Supreme Court in Tata Engg. & Locomotive Co. Ltd. v. Gram Panchayat AIR 1976 SC 2463 and also on various other submissions raised by the assessee in writing before the AAC.
4. The learned departmental representative, on the other hand, strongly defended the order of the AAC and highlighted the various points made out by him for withdrawing the above exemption. He tried to strengthen the case of the revenue by pointing out that dictionary meaning of the word ‘house’ is not to be adopted and the intention of the Legislature is to be ascertained and the purpose of the Act should be given effect to. He argued that maxim ex visceribus actus if properly applied while construing the word ‘house’ used in Section 5(1)(iv), the order of the AAC would have to be upheld.
5. We have heard the parties and examined the record produced before us. Section 5(1)(iv) prior to its amendment reads as under :
(5)(1) Subject to the provisions of Sub-section (1A), wealth-tax shall not be payable by an assessee in respect of the following assets, and such assets shall not be included in the net wealth of the assessee.-
(i) to (iii)** ** ** (iv) one house or part of a house belonging to the assessee and exclusively used by him for residential purposes.
By the Finance (No. 2) Act, 1971 with effect from 1-4-1972 the words ‘and exclusively used by him for residential purposes’ were deleted and, therefore, the exemption was extended to one house or part thereof and the requirement that such house should be exclusively used by the assessee ‘for residential purposes’ was done away with. In the explanatory notes it was explained that the purpose of above amendment was to avoid ‘general hardship to persons of small means who depend upon house property often as the sole means of livelihood’. The expression ‘house property’ has not been employed in the Wealth-tax Act but has well understood meaning under the Income-tax Act, 1961 (‘the 1961 Act’). ‘Income from house property’ is one of the heads under which income is assessed under Sections 22 to 27 of the 1961 Act. It has been fairly conceded even by the learned departmental representative that under the above head income of ‘any building’ notwithstanding its commercial nature is assessable. Thus, expression ‘house property’ used in explanatory note and borrowed from the 1961 Act has a meaning to convey. Further, it has been clarified that purpose of amendment is to avoid hardship to those who live on income of house property. We are, therefore, unable to agree with the AAC that the object of Amending Act was to restrict exemption to buildings residential in character. Incur opinion, buildings of commercial nature having income assessable under the head ‘Income from house property’ are also entitled to exemption.
6. The circular F. No. 317/23/73/WT dated 24-7-1973 further clarified the position. The AAC has only reproduced part of the circular at page 6 of his order. The letter dated 28-6-1973 referred to in the circular and the clarification issued are as under :
Annex-Letter, dated 28-6-1973 referred to in clarification-
After the amendment of the above section from 1-4-1972 it reads as under:
(iv) one house or part of a house belonging to the assessee.
The point for consideration is whether exemption is available for residential house only or to business premises also (of course within the limit laid down in the section).
In this connection, attention is invited to Sections 22 to 27 of the Income-tax Act. 1961, which refer to income from house property. These sections are applicable to income from house property whether the house property is residential or it is used for business. In the circumstances, it is presumed that the exemption to house property under Section 5(1)(iv) is available both to residential as well as business premises whether used by the assessee to it out (sic.). Please confirm.
Letter : F. No. 317/23/73-WT dated 24-7-1973, clarified the position as under:
I am directed to invite a reference to your letter dated 28-6-1973 (printed here as Annex) on the above subject and to say that your presumption is correct and exemption under Section 5(1)(iv) is available even for house used for commercial purposes.
From the above circular, it is abundantly clear that exemption is not to be restricted to the residential houses but also extend to ‘business premises’. It is now well settled that circulars issued by the Board under the Act are binding on all officers and persons employed in the execution of the Act even if they deviate from the provision of the Act. Quite apart from binding character, the circular is clearly in the nature of Contemporanea expositio furnishing legitimate aid in the construction of Clause (iv) of Section 5(1). The rule of construction by reference to contemporanea expositio is a well established rule of interpretation. In Balishwar Bagarti v. Bhagirathi Das [1908] ILR 35 Cal. 701, Mookherjee, J. stated the rule in the following term :
It is a well settled principle of interpretation that courts in construing a statute will give much weight to the interpretation put upon it, at the time of its enactment and since by those whose duty it has been to construe, execute and apply it. (p. 713)
The above statement of the rule was quoted with approval by the Supreme Court in Desh Bandhu Gupta & Co. v. Delhi Stock Exchange Association Ltd. AIR 1979 SC 1049.
7. The decision of the Supreme Court in the case of Tata Engg. & Locomotive Co. Ltd. (supra) really clinches the issue. In that case their Lordships were concerned with the meaning of the expression ‘house’ as used in Section 89 of the Bombay Village Panchayats Act, 1933. In the above decision, as is evident from the observations of their Lordships in paragraph 15, their Lordships were construing the above word in the sense which people conversant with the subject would attribute to it. Their Lordships have recorded that the counsel for the respondent rightly contended that the word ‘house’ would in its ordinary sense include any building irrespective of its use. Further, discussions as to what meaning should be given to the word ‘house’ in legal sense and under different statutes and in corpus juris secundum is contained in paragraphs 16 to 19 which are reproduced below :
16. It may be stated generally that the word ‘house’ is a structure of a permanent character. It is structurally severed from other tenements. It is not necessary that a house if adopted for residential purposes should be actually dwelt in (see Daniel v. Coutsting [1845] 14 LJCP 70). A building in Covent Garden had formerly been a dwelling house but was converted into a fruit store warehouse and offices in which no one slept and was held to be a ‘house’ as regards assessment to the rector’s rate within the provisions of the relevant statute.
17. The idea of the varieties of meanings can be had from the subject-matter of the statute. A consecrated church was treated as a house as regards the Building Line which a local authority has a right to prescribe (See Folkeston v. Woodward [1972] 15 Eq 159). Under the Public Health Act, 1875, ‘house’ was not limited to an ordinary dwelling house and included a day school having no boarders and where none of the staff resided. See Wimbledon v. Hastings [1903] 87 LT 11% (supra). Under the Compulsory Purchase Act, 1965 ‘house’ has been extended to a building which is used for business purposes and is not restricted to mere dwelling houses (See Ravenseft Properties v. London Borough of Hillingdon [1969] 20 P & CR 483).
18. The weight of judicial opinion is conclusively in favour of the view that the word ‘house’ extends to a building which is used for business and should not be restricted to a mere dwelling house (See Land Law, Cases and Materials by R.H. Mandsley and E.H. Burn, Third edn., page 832).
19. In Corpus Juris Secundum, Vol. 41, page 364 it is said that in a legal sense, the word ‘house’ in more comprehensive, but it is not limited to a structure designed for human habitation, and may mean a building or shed intended or used as a habitation or shelter for animals of any kind, a building in the ordinary sense or any building, edifice, or structure inclosed with walls and covered, regardless of the fact of human habitation. Again in Corpus Juris Secundum, Vol. 41, page 365 it is said that under particular circumstances, the term has been held equivalent to and interchangeable or synonymous with ‘building’, ‘dwelling’ and ‘dwelling house’ and sometimes ‘premises’. (p. 2467)
The decision of the Orissa High Court in K.B. Pradhan’s case (supra) is not applicable as in that case the structure in respect of which exemption was claimed was admittedly incomplete and work on it was in progress on the valuation date. Their Lordships of the Orissa High Court denied exemption as incomplete construction was not a house as it had not reached a habitable stage. The Allahabad High Court decision in Shiv Narain Chaudhari’s case (supra) dealt with the question-whether four different independent residential units which were connected by a common passage and bearing different municipal numbers could be treated as a house under Section 5(1)(iv), i.e., with an issue totally different from the one before us. The above two decisions relied on by the AAC, in our opinion, are not helpful in resolving the controversy before us.
8. The learned departmental representative had argued that dictionary meaning of the word ‘house’ should not be adopted while interpreting the above in Clause (iv) of Section 5(1). But here apart from dictionary, other material also support the case of the assessee that ‘house’ in Clause (iv) would include ‘business premises’. Here, apart from dictionary, objects of amending provisions, circular of the Board, decision of the Supreme Court support the case of the assessee. We also find force in the submission of the learned counsel for the assessee that wherever the Legislature intended to restrict the benefit or exemption to ‘residential house’ or dwelling place, it has so provided and specifically we see no justification for restricting the exemption only to the residential houses or houses meant for residential purposes. If the object of the exemption in question is to encourage building of houses, we cannot hold that houses other than residential in 1972 were in abundance and there was no need to encourage buildings other than residential houses. There is and has always remained dearth of commercial premises also. Thus, construction placed by us on the word ‘house’ can in no way defeat the object of the statute. The word ‘house’ is commonly used as ‘cinema house’, ‘Parliament House’, ‘House of Commons’, referring to buildings not meant to be used for residential purposes.
9. In view of the above discussion, we are of the opinion that the word ‘houses’ would include business premises such as ‘offices’ and ‘show room’ and such buildings are also entitled to exemption under the above clause. We also disagree with the observation of the learned AAC that the building, in question, cannot be used for human habitation without material alterations. As stated earlier, on perusal of the plan of the building, in question, we find that it is of permanent character and is in shape of halls with facilities of attached toilets and WCs, etc. The building of course does not have the facilities of drawing room, dining room, separate bed rooms, etc., etc. But the house does not mean a modern house fit for use for residential purposes by elite of the society. If the above interpretation is accepted, then a man of ordinary means can never dream of possessing a house. For the above reasons, we set aside the order of the AAC enhancing the assessment.
10. The other ground that the AAC had no jurisdiction to enhance assessment was not seriously pressed before us.
11. In the result, the appeals are allowed.