TMI Blog2001 (10) TMI 39X X X X Extracts X X X X X X X X Extracts X X X X ..... year is 1979-80 and the relevant valuation date is March 31, 1979. The assessee along with his three brothers owned two open plots in New Brahma Kshatriya Co-operative Housing Society Ltd. and one plot in Samasta Brahma Kshatriya Co-operative Housing Society Ltd. by buying qualifying shares of the said societies. Each of the brothers had a 1/4th interest in all the three plots of the lands. The total value of all the three plots was assessed at the relevant time at Rs. 1,60,500 and the assessee's 1/4th interest in the said plots was, therefore, assessed at Rs. 40,125. The assessee took up the stand that since his valuer had not properly considered various restrictions contained in the bye-laws of the two societies, his 1/4th interest valued at Rs. 40,125 was not proper. According to the assessee, at the highest only the deposits amounting to Rs. 20,000 made with the societies could be considered as assets for wealth-tax purposes and since the assessee had a 1/4th interest in such deposits, only Rs. 5,000 could be included in his net wealth. The Inspecting Assistant Commissioner (Assessments) negatived the assessee's contention on the ground that the approved valuer of the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellaneous application which also came to be rejected by the Tribunal. Hence, this reference at the instance of the assessee. As regards the first question which is on the merits of the controversy, Mr. K.H. Kaji, learned counsel for the assessee, has raised the following contentions: The Legislature intended to include in the net wealth only the buildings or part thereof owned by a co-operative housing society and allotted/let out to its members along with the land appurtenant thereto but open plots of land as such were not to be included in the net wealth. The provisions of section 45(g) of the Act specifically provide that no tax shall be levied under this Act in respect of the net wealth of any co-operative society. In view of a similar exemption granted to any shares in any co-operative society by section 5(1)(xxviii), all the rights (including the leasehold interest in the open plots of land belonging to the co-operative housing society) which flow to the members of a co-operative housing society from the shares held by the members in a co-operative housing society are exempt from the liability to wealth-tax. In view of the provisions of clauses (xxvi), (xxix) and (xxx) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... individual certain assets by deemed fiction under clause (a) of sub-section (1) of section 4 and by clause (b), the value of the assessee's interest in the partnership firm or an association of persons is required to be determined in the prescribed manner, i.e., as provided by rule 2 of the Wealth-tax Rules. All that section 4(1)(b) means in this context that for the purposes of this sub-section an association of persons does not include a co-operative housing society, but that cannot have the effect of granting an exemption to property which is definitely an asset as defined by section 2(e) of the Act. Sub-section (7) of section 4 covers both, the building as well as land, for exigibility to wealth-tax. Under section 5(1)(xxviii) what is exempted is merely the value of the assessee's share in a co-operative housing society but the assessee's leasehold interest in a plot of land or in a building belonging to a co-operative housing society is not exempted. We find that Mr. Kaji's submission about the contents of the controversy is fully borne out by the order of the Tribunal. We are, therefore, of the view that question No. 1 referred by the Tribunal really seeks to raise the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he value of his interest in the firm or association determined in the prescribed manner." Sub-section (7) of section 4, reads as under: "(7) Where the assessee is a member of an association of persons, being a co-operative housing society, and a building or a part thereof is allotted or leased to him under a house building scheme of the society, the assessee shall, notwithstanding anything contained in this Act or any other law for the time being in force, be deemed to be the owner of such building or part and the value of such building or part shall be included in computing the net wealth of the assessee; and, in determining the value of such building or part, the value of any outstanding instalments of the amount payable under such scheme by the assessee to the society towards the cost of such building or part and the land appurtenant thereto shall, whether the amount so payable is described as such or in any other manner in such scheme, be deducted as a debt owed by him in relation to such building or part. Explanation.-... (c) The expression 'property' includes any interest in any property, movable or immovable, the proceeds of sale thereof and any money or investment f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... art thereof" would also include open plot of land, cannot be accepted. The Legislature in its wisdom did not use the expression "property" which is an expression of widest amplitute and which expression has been defined by Explanation (c) to section 4 as including any interest in any property, movable or immovable. Similarly, the expression "assets" has been defined by section 2(e) as including property of every description, movable or immovable and even leasehold interest in a property for a period exceeding six years has also been included in the definition of "assets". When the Legislature has used the expressions "assets" and "property" which are expressions of widest amplitude in other provisions of the Act but has used the expression "building or part thereof" in section 4(7) it has to be held that the Legislature intended to include only the building or a part thereof along with the land appurtenant thereto for including the value thereof in the net wealth for the purpose of levying wealth-tax. The contention of Mr. Naik for the Revenue that there was no rationale for leaving out the open plot of land belonging to a co-operative housing society and let out to a member from t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons, there is no justification in accepting the argument of learned counsel for the Revenue that the expression "building or part thereof" should also be treated as including open plot of land. As regards the contention of learned counsel for the Revenue that what is exempted under section 5(1)(xxviii) is only the shares in the co-operative housing society and not the leasehold interest in open plot of land belonging to the co-operative housing society, the argument is incomprehensible. It is only by virtue of his being a member of the co-operative housing society on the strength of holding shares in the society that the member is allotted any plot of land or any building. In response to a query from the court whether a member can sell all his shares in a co-operative housing society and still retain any interest in any property whether land or building belonging to a co-operative housing society and allotted/let out to the member or whether any member can transfer any such right to possession and enjoy the property without selling the shares, held by him, learned counsel for the Revenue submitted that the shares as well as interest in the land or building are two separate proper ..... X X X X Extracts X X X X X X X X Extracts X X X X
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