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Issues:
1. Whether the personal right of residence in a palace constitutes an asset under the Wealth-tax Act, 1957. Analysis: The case involved a dispute regarding the inclusion of the value of a personal right of residence in a palace in the taxable wealth of the assessee under the Wealth-tax Act, 1957. The assessee, a widow, had obtained a right of residence in the palace along with her husband, the late Maharaja. The Wealth-tax Officer included the value of this right of residence in the net wealth of the assessee for the assessment year 1977-78. However, the Commissioner of Wealth-tax (Appeals) and the Income-tax Appellate Tribunal both held that the personal right of residence did not constitute an asset under the Act and therefore should not be included in the taxable wealth. The Department argued that the right of residence should be considered an asset under section 2(e) and net wealth under section 2(m) of the Act. They contended that the right of residence was an actionable claim and therefore taxable under the Wealth-tax Act. The Department also relied on previous court decisions to support their argument regarding the valuation of such rights. However, the court found that the right of personal residence granted to the assessee did not fall under the definition of "actionable claim" and was not an asset that could be sold in the open market. The court noted that the right of residence was personal in nature and could not be legally transferred or sold to a third party. The court emphasized that the right of residence did not have a market value that could be realized through a sale. Ultimately, the court held that the Tribunal's decision, which concluded that the personal right of residence was not an asset for wealth tax purposes, was legally sound. The court declined the Department's request to refer the question of law to the court for opinion, leading to the dismissal of the Department's application. In conclusion, the judgment clarified that a personal right of residence, such as the one in question, does not constitute an asset under the Wealth-tax Act, 1957, and therefore should not be included in the taxable wealth of the assessee. The court's decision was based on the specific nature of the right of residence and its inability to be treated as a marketable asset.
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