1987 (3) TMI 163 - AT - Wealth-tax

Issues Involved:
1. Deduction under section 5(1)(iv) of the Wealth-tax Act.
2. Interpretation of "belonging to" under section 2(m) of the Wealth-tax Act.
3. Applicability of Supreme Court judgments.
4. Binding nature of CBDT circulars.
5. Inclusion of the value of right, title, and interest in net wealth.

Issue-wise Detailed Analysis:

1. Deduction under section 5(1)(iv) of the Wealth-tax Act:
The revenue's grievance was that the AAC erred in directing the Wealth-tax Officer (WTO) to allow deduction under section 5(1)(iv). The assessee argued that their entitlement to possession, use, occupation, and enjoyment of a flat should qualify them for exemption under section 5(1)(iv). The Tribunal concluded that the assessee's flat, not being registered in their name, does not "belong to" them for the purpose of section 5(1)(iv) exemption.

2. Interpretation of "belonging to" under section 2(m) of the Wealth-tax Act:
The assessee's counsel argued that the term "belonging to" should be interpreted in a broader sense, including interests less than absolute ownership. The Tribunal referred to the Supreme Court's judgment in Nawab Sir Mir Osman Ali Khan, which held that "belonging to" connotes ownership only when immovable property is registered in the name of the vendee. Therefore, the flat not being registered in the assessee's name could not be considered as "belonging to" them under section 2(m).

3. Applicability of Supreme Court judgments:
The assessee's counsel contended that the earlier Supreme Court judgment in Raja Mohammad Amir Ahmad Khan should take precedence over the Nawab Sir Mir Osman Ali Khan case. The Tribunal noted that the Supreme Court in Nawab Sir Mir Osman Ali Khan had considered and relied upon the judgment in Raja Mohammad Amir Ahmad Khan. Thus, the Tribunal concluded that the judgment in Nawab Sir Mir Osman Ali Khan is binding and applicable.

4. Binding nature of CBDT circulars:
The assessee cited a CBDT circular recognizing interests less than ownership as assets belonging to the assessee. The Tribunal held that the circular, being related to estate duty, is not directly applicable to the interpretation of "belonging to" in section 2(m) of the Wealth-tax Act. The Tribunal emphasized that the Supreme Court's interpretation in Nawab Sir Mir Osman Ali Khan takes precedence over the CBDT circular.

5. Inclusion of the value of right, title, and interest in net wealth:
The Tribunal observed that while the flat itself cannot be included in the net wealth due to lack of registration, the value of the assessee's right, title, and interest in the flat should be included. The Tribunal directed the WTO to reassess the value of the assessee's interest in the flat and include it in the net wealth, considering the Supreme Court's judgment in Nawab Sir Mir Osman Ali Khan.

Conclusion:
The Tribunal set aside the orders of the authorities below and remanded the case to the WTO for a fresh decision. The WTO was instructed to reassess the value of the assessee's right, title, and interest in the flat and include it in the net wealth, following the Supreme Court's judgment in Nawab Sir Mir Osman Ali Khan. The revenue's appeals were allowed for statistical purposes, and the assessee's cross objections were dismissed as time-barred.

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