B.N. Chakravarty vs Controller Of Estate Duty
2001 Latest Caselaw 465 Del

JUDGMENT

Arijit Pasayat, C.J.

1. At the instance of the legal heirs of Shri B. N. Chakravarty who are (hereinafter referred to as "the accountable person"), and deceased, respectively, the following question has been referred under Section 64(1) of the Estate Duty Act, 1953 (in short, "the Act"), by the Income-tax Appellate Tribunal, Delhi Bench "B", New Delhi (in short, "the Tribunal"), for the opinion of this court :

"Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in upholding the disallowance of deduction of Rs. 1 lakh claimed by the accountable person from the value of the estate of the deceased under Section 33(1)(n) of the Estate Duty Act, 1953, in respect of the portion of the house property 19-G, Maharani Bagh, New Delhi ?"

2. The dispute relates to non-allowance of the deduction of Rs. 1 lakh under Section 33(1)(n) of the Act. The first accountable person, Smt. Indira Chakravarty, died on March 15, 1978, after the death of the deceased Shri B. N. Chakravarty on March 26, 1976. Therefore, their son, Shir S. N. Chakravarty (hereinafter referred as "the present accountable person"), was considered to be the accountable person. In the estate duty account submitted by the accountable person, it was claimed that house property at 19G, Maharani Bagh, New Delhi, was partly on rent and partly used for own residence and accordingly exemption was claimed. The Assistant Controller of Estate Duty (in short, "the Assistant Controller"), observed that the claim was not established. He observed that the deceased was the Governor of Haryana and continued to hold this post till his death at Chandigarh. He noticed that, at no point of time, he or any member of his family was residing in the house. He held that the mere fact that near about the date of death, a part of the house was lying vacant did not mean that it was self-occupied or kept for self occupancy. Accordingly, the claim for self-occupancy was rejected and the full value of the house was added to the estate. In appeal before the Appellate Controller of Estate Duty (in short, "the Appellate Controller"), it was pointed out that the rear portion of the house was exclusively used by the deceased for his residence and the front portion was let out. It was explained that the rear portion, which was fully furnished was never let out since May 1, 1973, although prior to that date, the front as well as the rear portion were let out. The term of the deceased as the Governor of Haryana came to an end some time in September, 1972, and thereafter, he would have come to stay in the house. Therefore, it was pointed out that the rear portion was not let out but was kept ready for personal use of the deceased. Reliance was also placed on a letter dated January 8, 1982, written by then Chief Minister of Haryana in this regard. The Appellate Controller, noticed that the deceased had claimed vacancy allowance under Section 24(1)(i) of the Income-tax Act, 1961 (in short "the IT Act"), for the assessment years 1974-75 and 1975-76 in respect of the rear portion and he did not claim any deduction under Sub-sections (2) and (3) of Section 23 of the Income-tax Act. He, however, noticed that for the assessment year 1976-77, deduction was claimed by Smt. Indira Chakravarty under Section 23(2) of the Act for self-occupation on the ground that she shifted to the house after the death of the deceased. In the aforesaid background, it was held that in order to be entitled to the claim the house should be in self-occupancy and not merely in the possession of the deceased. He upheld the view of the Assessing Officer. The matter was carried in further appeal before the Tribunal by the present accountable person. The stand before the lower forums was reiterated before the Tribunal. Considering the language of Section 33(1)(n) of the Act, the Tribunal held that mere keeping of the house ready for personal use of the deceased did not meet the requirements of law.

3. On being moved for reference, the question, as set out above, has been referred for the opinion of this court.

4. We have heard learned counsel for the parties. Learned counsel for the present accountable person submitted that the Tribunal should have adopted a pragmatic view, that has to be taken in a case of this nature and has placed reliance on materials which have no relevance. Learned counsel for the Revenue, on the other hand, submitted that the language of Section 33(1)(n) of the Act is clear and, therefore, the Tribunal's view cannot be faulted.

5. The word "house" has no statutory definition and therefore it has to be given the common parlance meaning. Several meanings of the word are contained in dictionaries. One of them is "building for human habitation, especially a dwelling place". The observations made in Annicola Investments Ltd. v. Minister of Housing and Local Government [1965] 3 All ER 850 (QBD), are apposite in ascertaining the meaning. They are to the following effect (page 853): "The precise meaning of the word 'houses' has frequently arisen for judicial consideration, but mostly in connexion with other statutes or in other contexts. Decisions in relation to such other matters appear to me to afford very little, if any, assistance, to the determination of its meaning in this case. What seems to be clear is that the word has a distinct fluidity of meaning and that it is best construed in relation to the context in which it is found and in relation to the objects and purposes of the Act or of the section of the Act in which it is used."

6. The language of Section 33(1)(n) of the Act is similar to the language of Section 5(1)(iv) of the Wealth-tax Act, 1957 (in short, "the WT Act"), as it stood prior to amendment with effect from April 1, 1971. The requirement of use by the assessed or the deceased as the case may be of the house property for residential purposes must be construed pragmatically, fairly and reasonably. It cannot be construed in a pedantic sense or impracticable method. As was observed by the Andhra Pradesh High Court in CWT v. B. M. Bhandari [1980] 123 ITR 554, the assessed may himself live or use the building for residential purpose. He may allow any member of his family to live or use the same for residential purpose. The assessed need not also or is not expected to use his building throughout the year or without any interruption. He may not actually use the house by himself. Unless, he has let out the same for rent or has allowed it to be used for any commercial purpose, it cannot be said that he has not exclusively used it for residential purpose. Learned counsel for the Revenue submitted that a part of the building was actually let out and further merely because a part of the building was lying vacant and/or unoccupied, it cannot be said that it was kept ready to use for residential purpose. We find that physical residence is not really material. As noted above, what has to be considered is whether it was kept ready for use and in fact has been used for residence. As the factual scenario goes to show the house was kept in readiness for use and in fact was not let out after May 1, 1973.

7. In CWT v. Avtar Mohan Singh [1972] 83 ITR 52, this court also had an occasion to consider the significance of the words "for residential purposes" in Section 5(1)(iv) of the Wealth-tax Act. Views similar to the one we have noted above were expressed by this court. The use of the house by the assessed has to be "exclusive". In this context, exclusiveness does not mean loneliness. It does not require that the assessed should live alone in the house. Use of the house, like possession of the house, has two aspects, namely, actual use without claim to any right and use with the claim to a right to do so.

8. In view of the above position, the Tribunal's view cannot be maintained. The question referred, therefore, is answered in the negative, in favor of the present accountable person and against the Revenue.

9. This reference is disposed of.