Karnataka H.C : The petitioner is aggrieved by the letter dt. 16th Aug., 1990, issued by the CIT stating that investment in flats is not in consonance with rr. 68 and 69 of the IT Rules.

High Court Of Karnataka

Karnataka Bank Employees Association vs. CIT & Anr.

Sections Rule S. 68, Rule 69

V.K. Singhal, J.

Writ Petn. No. 22697 of 1991

3rd April, 1998

Counsel Appeared

B.L. Acharya, for the Petitioner : H. Raghavendra Rao, for the Respondent



The petitioner is aggrieved by the letter dt. 16th Aug., 1990, issued by the CIT stating that investment in flats is not in consonance with rr. 68 and 69 of the IT Rules.

2. Rule 68 of the IT Rules has contemplated the circumstances by which withdrawals may be permitted by the trustees of the provident fund. One such circumstance is to meet the expenditure on building a house, or purchasing a site or a house or a house and a site. According to the CIT, the word “building” would not cover “flat”.

3. “Flat” has been defined in the Law Lexicon as under : “Flat. In the ordinary use of the term, a flat is a self- contained set of rooms, structurally divided and separately owned or let from the rest of a building, which for the most part consists of other flats separated in like manner. Formerly a flat would commonly comprise an entire storey or floor, but the increased size of modern buildings has rendered this less usual. The word is one of popular use without any defined legal significance. The rule is to construe the word in the popular rather than in the technical legal sense and in accordance with the general object indicated by the context.” The word “house” has been defined as under : “House. A place of dwelling or habitation : also a family or household. 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” [per Halsbury C., Grant vs. Langston (1900) AC 390 : 69 LJC 68]. “Formerly houses were built so that each house occupied a separate site, but in modern times a practice has grown up of putting separate houses one above the other. They are built in separate flats or storeys ; but for all legal and ordinary purposes they are separate houses. Each is separately let and separately occupied and has no connection with those above or below, except in so far as it may derive support from those below instead of from the ground, as in the case of ordinary houses” [per Jessel, M.R., Yorkshire Insurance vs. Clayton 8 QBD 424 : 51 LJQB 84, cited with approval by Halsbury C., and Ld. Brampton in Grant vs. Langston (1900) AC 390].”

4. The word “house” has been defined in Words and Phrases as : “House” within constitutional protection from unreasonable searches and seizures, may include business office, store, hotel room, apartment, automobile or occupied taxicab. [Lanza vs. State of N. Y. (N.Y. 82 S.Ct. 1218, 1220; 370 U.S. 139; 8 L.Ed. 2nd 384]. A house is a structure intended or used for human habitation, especially a human habitation which is fixed in place and is intended for the private occupation of a family or families. [Simmons vs. State 129 N. E. 2d 121, 127, 234 Ind. 489].”

The words “building” or “flat” have not been defined in the IT Rules. The meaning which is given in the common parlance has to be ascertained. With the growth of civilization and more particularly in recent years in the cities instead of constructing an independent building to be used as a house the concept of multistoreyed flats has developed. The structure intended for human habitation having its place and intended for the occupation of a family has been defined as a “house”. This purpose is achieved by an independent house as well as a flat. The vertical growth led to multistoreyed construction of buildings where independent flats are constructed for human habitation. It may be one flat or one storey or a number of flats in a storey. Flat could be covered by the word “house” and, therefore, the interpretation which the CIT has taken could not adhere to be in accordance with the rules.

Accordingly, the letter dt. 16th Sept., 1990, is quashed and the writ petition is allowed.

[Citation : 233 ITR 628]

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