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Issues Involved:
1. Nature of interest granted to Ranganayaki Ammal under the partition deed. 2. Eligibility for relief under section 5(1)(iv) of the Wealth-tax Act. 3. Interpretation of "exclusive use" for residential purposes under section 5(1)(iv). Detailed Analysis: 1. Nature of Interest Granted to Ranganayaki Ammal: The court examined the partition deed dated December 31, 1951, which divided the joint family immovable properties of Bheema Naidu. The deed specified that Ranganayaki Ammal, the widowed daughter-in-law, would enjoy the family house till her lifetime without encumbrances. After her lifetime, the property would vest absolutely in her four sons. The Tribunal initially interpreted this as granting a "life estate" to Ranganayaki Ammal. However, the court disagreed, emphasizing that the restriction on encumbrances indicated that Ranganayaki Ammal was given only a "right of residence" and not a typical life interest. The court noted that a life interest usually allows for dealing with the property, which was inconsistent with the deed's restrictions. 2. Eligibility for Relief under Section 5(1)(iv) of the Wealth-tax Act: Section 5(1)(iv) of the Wealth-tax Act exempts one house or part of a house "belonging to the assessee exclusively used by him for residential purposes." The court needed to determine if the sons could claim this exemption. The Tribunal had ruled that the sons, though owners, could not claim the exemption as they had no right to reside in the house during their mother's lifetime. The court, however, found that the sons had a vested remainder interest in the property, which was heritable and alienable. The court concluded that the sons' interest in the property was not merely expectant but a present right, albeit subject to the mother's right of residence. Thus, the sons were deemed to have a legal right to reside in the house, fulfilling the conditions for exemption under section 5(1)(iv). 3. Interpretation of "Exclusive Use" for Residential Purposes: The court analyzed whether the term "exclusive use" under section 5(1)(iv) implied that the sons must have an absolute right to exclude others from the house. The court noted that the deed described the sons and the mother as co-owners, indicating that the right of residence was not exclusive to Ranganayaki Ammal. The court emphasized that in a Hindu undivided family, the right of residence granted to a widowed lady does not exclude other family members from residing in the family house. Thus, the sons' residence in the house was not permissive but a legal right. The court also referenced previous judgments, including CWT v. K. Ramachandra Chettiar, which supported the interpretation that a life interest or a right of residence is an interest in property and qualifies for exemption under section 5(1)(iv). Conclusion: The court concluded that the sons were entitled to the relief under section 5(1)(iv) of the Wealth-tax Act. The court held that the interest granted to Ranganayaki Ammal was a right of residence, not a life interest, and that the sons, as vested remaindermen, had a legal right to reside in the house. The court answered the referred question in the negative, favoring the assessees, and granted costs to the assessees in both sets of tax cases.
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