2004 (8) TMI 34 - HC - Wealth-tax

House vis- -vis cinema building - exemption was claimed under section 5(1)(iv) - Whether Tribunal was right in law in holding that the assessee would be entitled to deduction of Rs. 1, 00, 000 under section 5(1)(iv) against the value of her share in M/s. Amarpali Cinema in which she was a partner? AO disallowed the exemption on ground that assessee was not the owner of the land and building since it belonged to the firm - Revenue submitted that under section 5(1)(iv) exemption is granted to one house or part of a house belonging to the assessee and not to a cinema building as by no stretch of imagination a cinema building can be said to be a house - we answer the question of law referred to us in the negative i.e. in favour of the Revenue and against the assessee.

Summary

Issues:
- Interpretation of section 5(1)(iv) of the Wealth-tax Act, 1957 regarding exemption for a cinema building under the ownership of a partner in a firm.

Analysis:
The High Court of ALLAHABAD was presented with a question of law under section 27(1) of the Wealth-tax Act, 1957, concerning the entitlement of an assessee to deduction of Rs. 1,00,000 under section 5(1)(iv) against the value of her share in a cinema building owned by a partnership firm. The respondent-assessee, a resident-individual, claimed exemption for land and building belonging to the firm, M/s. Amarpali Cinema, in which she held a 20% share. The Assessing Officer initially denied the claim, arguing that the assessee was not the owner of the property since it belonged to the firm. However, the first appellate stage ruled in favor of the assessee, leading to the matter being taken to the Income-tax Appellate Tribunal.

During the proceedings, the Revenue contended that exemption under section 5(1)(iv) is granted for a house or part of a house belonging to the assessee, not for a cinema building, as a cinema building cannot be considered a house. On the other hand, the assessee's counsel referenced a previous court decision to support the claim that even a cinema building is eligible for exemption under section 5(1)(iv). The court noted that the exemption is specifically for a house or part of a house where people live, and a cinema building does not qualify as a house since it is not meant for habitation. Referring to a previous case, the court affirmed that a cinema hall is not a house at all, thus not eligible for the exemption.

Ultimately, the High Court aligned with the decision in a previous case and ruled against the assessee, stating that exemption under section 5(1)(iv) of the Act is not applicable to a cinema building. The judgment was delivered in favor of the Revenue, and each party was directed to bear their own costs. This judgment clarifies the scope of exemption under section 5(1)(iv) in the context of ownership of a cinema building by a partner in a firm, emphasizing the distinction between a house and a commercial building like a cinema hall.