ORDER
A.V. Balasubramanyam, Judicial Member
1. The point in the appeals is a short one. It is concerned with the meaning of the word ‘house’ in Section 5(1)(iv) of the Wealth-tax Act, 1957 (‘the Act’) in relation to these cases, it is whether the building having several residential units is one house for the purpose of Section 5(1) (iv) to get the maximum relief.
2. Among the assets included in the net wealth, an item is a share in an immovable property called ‘Bhaveshnagar property’. The assessee is a co-owner along with two others, each having one-third share. The WTO fixed the value of the assessee’s one-third share at Rs. 95,000 as against Rs. 84,667 returned by him, and allowed exemption on the full value under Section 5(1)(iv) in the original assessments. On account of an audit objection, the WTO started proceedings under Section 35 of the Act meaning to set right few mistakes one of them being about the exemption allowed in respect of Bhaveshnagar property. The WTO heard the party and passed orders which had the effect of reducing the extent of exemption. In these appeals the point is restricted to the extent of exemption allowable under Section 5(1)(iv) as that was the only question carried by the assessee in the appeal.
3. Bhaveshnagar property consists of several independent residential flats. It had been suggested in the audit objection that in view of the decision of the Supreme Court in the case of Tata Engg. & Locomotive Co. Ltd. v. Gram Panchayat AIR 1976 SC 2463, each residential block is by itself a ‘house’ and that the original assessments granting exemption for the full value of the building was a mistake. To the notice issued, the assessee objected and the contentions were two-fold. One was that whether exemption is allowable only in respect of one tenement regarding that as a house or whether the whole of the building is to be taken as a house is a debatable issue and that the WTO did not have jurisdiction to decide over such extremely doubtful proposition in a rectification proceedings under Section 35. The other was on merits. The WTO held that as per the above decision of the Supreme Court each residential unit is by itself a house and that having regard to the number of residential blocks in the building and the total property value, the value of each residential unit will not exceed Rs. 10,000. He, therefore, ruled that exemption is allowable only to the extent of Rs. 10,000 and that resulted in increasing the value of the net wealth by Rs. 85,000.
4. The assessee carried the matter in appeals. Before the AAC, the same contentions had been urged. In regard to merits, reliance had been placed upon the decision of the Allahabad High Court in the case of Shiv Narain Chaudhari v. CWT [1977] 108 ITR 104. The AAC passed a consolidated order accepting the claim of the assessee. The revenue is in appeal.
5. Arguing for the revenue, Shri Thomas stated that the entire value of the property cannot be exempt under Section 5(1)(iv) since it is available only to a house or a part of a house and inasmuch as the building in question consists of several tenements each being a separate residential unit. The argument proceeded on the premise that each residential premise is a house and that exemption is not allowable for the entire block comprising of several dwellings. Shri Warde replied that, in the first place, the question raised by the revenue regarding exemption is on the face of it a ticklish point of law and the WTO did not have jurisdiction to decide such an issue while exercising powers under Section 35. On merits, he not only distinguished in Tata Engg. & Locomotive Co. Ltd.’s case (supra) on facts, but placed strong reliance upon the Allahabad High Court’s decision in the case of Shiv Narain Chaudhari (supra). Inasmuch as we are satisfied that on merits the claim of the assessee is substantial, we straightaway decide that issue on the assumption that proceedings under Section 35 were competent.
6. To recapitulate facts which are not in the region of controversy, Bhaveshnagar property has several independent residential units occupied by different tenants and all used for residential purposes. All these tenements are independent residential portions contained in one building borne on the municipal record in one number. The value of the entire building stands settled at Rs. 2,85,000. The assessee’s share comes to Rs. 95,000.
7. According to the submission of the learned counsel for the assessee, the number of the residential units in the building is about 60. The WTO observes that the value of any one of residential units will not exceed Rs. 10,000. It appears to us that the building is something like a ‘Chawl’ where different tenants occupy separate portions, but all tenements are housed in one structural block.
8. The WTO was influenced by the statement of Jessel M.R. in Yorkshire Insurance v. Clayton [1881] 8 QBD 421, 424 found in Tata Engg. & Locomotive Co. Ltd.’s case (supra) :
…Formerly, houses were built so that each house occupied a separate site. In modern time a practice has grown up of putting separate houses one above the other. They are built in separate flats or storeys. For legal and ordinary purposes they are separate houses. Each is separately let and separately occupied. One has no connection with those above or below, except insofar as it may derive support from those below, instead of from the ground as in the case of ordinary houses. (p. 2467)
Their Lordships of the Supreme Court were construing the meaning of the word ‘house’ used in the Bombay Village Panchayats Act, 1933, and the question was whether ‘house’ included a factory building also.
9. In Grant v. Langston 1900 AC 383, Halsbury C. states :
A hundred years ago there was not much difficulty in saying what was a ‘house’ but builders and architects have so altered the construction of houses, and the habits of people have so altered in relation to them, that ‘house’ has acquired an artificial meaning and the word is no longer the expression of a simple idea. To ascertain its meaning one must understand the subject-matter with respect to which it is used in order to arrive at the sense in which it is employed in a statute. (p. 390)
The above has been stated with approval in the case of Ramavatar Budhaiprasad v. Assistant STO AIR 1961 SC 1325, and again in Tata Engg. & Locomotive Co. Ltd.’s case (supra). The word ‘house’ is not defined in the Act. To know the construction of the word ‘house’ in Section 5(1)(iv), one has to understand the subject-matter in respect to which it is used in the Act.
10. The facts in Shiv Narain Chaudhari’s case (supra) may not be closely comparable to the case of the assessee. However, the observations of their Lordships and few English decisions to which the judgment makes a reference do provide a guide. In Shiv Narain Chaudhari’s case (supra), there was one building occupied by a HUF consisting of four adult members, each one occupying a separate residential unit. What is more, the building was having two different municipal numbers. Their Lordships concluded that if the building should otherwise come within the meaning of the word ‘house’, the fact that the four male members were living separately in different self-contained portions did not make the four different portions of the building into many houses. The building related to these appeals was assessed as one for the purpose of municipal rate.
11. The statement of Lawrence J. in Annicola Investments Ltd. v. Minister of Housing & Local Government [1965] 3 All ER 850 (QB) is pertinent in this connection. It reads :
…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.
12. In Benabo v. Wood Green Corpn. [1946] KB 38, it was held that a house let separately to two or more tenants was not, by reason of that letting, more than one house. It was a case where the construction of the word ‘house’ was being ascertained for the purposes of rating under the Housing Act, 1936.
13. In Okerekev. Borough of Brent [1966] 1 All ER 150, a building consisted of three separate self-contained dwellings, each rated separately, and occupied by different families. It was viewed that it would be wrong to hold that each tenant in a tenement block is a house. Considering all these English authorities, their Lordships of the Allahabad High Court summed up in Shiv Narain Chaudhari’s case (supra) :
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. (P. HO)
14. It appears to our mind that the meaning of the word ‘house’ is not restricted or controlled to a single residential unit and we see no controlling provisions in the statute and the word, it seems to us, takes into itself the whole physical erection or amalgamated building without any reference to the interior or internal arrangement created for occupation of several tenants. The exemption allowed in the original assessments was, therefore, proper. For these reasons, we sustain the appellate order cancelling the order passed under Section 35.
15. The appeals are dismissed.
