High Court demands proof from joint owners availing luxury tax relief
Kochi- The state government of Kerala has recently courted a rule that every joint owner of a building availing luxury tax exemption under Kerala Building Tax Act will have to provide proof for the amount spent by each of them.
This ruling was passed while considering a petition which was filed by two brothers in Kochi. The petition which was filed at the high court stated that both the brothers had challenged the levying of the luxury tax under the Section 5A of the Kerala Building Tax Act.
The Kerala Building Act states that luxury tax will be liable in case the plinth area of the building is larger than 278.7 square meters. Apparently, both the brothers’ wives had purchased six cents of land in Thoppumpady.
With the purchase of the land, both the brothers’ wives had signed an agreement with effect that the ground floor of the two-storied building will have construction by both the brothers with one of them constructing the first floor for residential purposes.
Although the building was separately numbered by the Kochi Corporation, the entire building was treated as one unit and was levied with luxury tax through an order issued on July 15, 2005.
The brothers however approached the revenue divisional officer requesting an appeal against an order by the corporation. The appeal was rejected in December 14, 2005. It was decided that a revision will be presented before the district collector who further transferred the matter to the tahsildar for new assessment.
With the issuing of an order to levy luxury tax by the tahsildar, the brothers had to enter into a fresh appeal process again.
Further, the brothers had to approach the high court as the district collector had rejected their appeal. As per the counsel, since the ground floor and the first floor were owned by two different people along with separate contributions for the construction, the tax should be levied separately.
The Section 2 (e) of the Act states that a building with different apartments should have an evidence to prove that the building is not owned by two separate owners but even the constructional costs are met by joint owners in order to qualify the building for assessment as separate buildings.
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Kerala Building Act, Kerala Building Tax Act, Kochi, Kochi Corporation, luxury tax exemption, luxury tax under the Section 5A, owner of a building, Residential purposes, state government of Kerala
