1983 (5) TMI 65 - AT - Wealth-tax

Summary

Issues:
- Whether the assessee is entitled to exemption under section 5(1)(iv) of the Wealth-tax Act, 1957.

Analysis:
1. The appeals involved a common issue of whether the assessee is entitled to exemption under section 5(1)(iv) of the Wealth-tax Act, 1957. The appeals related to the assessment years 1974-75 to 1978-79, where the assessee claimed exemption for a property based on a will executed by her late husband.

2. The assessee's claim for exemption under section 5(1)(iv) was rejected by the WTO and sustained by the AAC, who held that the property was owned by the sons of the assessee, and the assessee only had life-interest, which did not qualify for exemption. The issue revolved around whether the life-interest of the assessee could be considered as a house or part of a house for exemption under section 5(1)(iv).

3. The assessee contended that she was the owner of the property to the extent of life-interest, citing legal precedents. The Tribunal considered the rights of the assessee, including the right of residence and rental collection, as valuable rights akin to legal owners. The Tribunal analyzed the definition of 'assets' under section 2(e) of the Act, equating assets with property of every description, movable or immovable.

4. The Tribunal further examined the definition of net wealth under section 2(m) and the valuation of assets under section 7, emphasizing that the assets should belong to the assessee for wealth tax purposes. The Tribunal referred to judicial interpretations regarding the term 'belonging' in similar statutes, holding that even possession of an interest less than full ownership could be considered as belonging to the assessee.

5. The Tribunal concluded that despite the legal ownership by the sons, the property could be said to belong to the assessee for the purpose of exemption under section 5(1)(iv). The Tribunal differentiated the right of a life-tenant from the exceptions in the Transfer of Property Act, ultimately allowing the assessee's claim for exemption to the extent of the value of life interest included in her net wealth.

6. Miss M. Fatima Beebi, the Judicial Member, supported the conclusion that the assessee was entitled to exemption under section 5(1)(iv). She referenced a recent decision by the Madras High Court to further support the view that life-interest constitutes a fractional interest in property, making the assessee eligible for exemption under section 5(1)(iv).

7. In conclusion, the Tribunal allowed the appeals, holding that the assessee was entitled to exemption under section 5(1)(iv) for all the assessment years in question.