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TMI Blog1989 (1) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... the life interest of the assessee added by the Income-tax Officer in accordance with rule 1B of the Wealth-tax Rules, 1957 ?" The assessee is Prince Muffakkam Jah Bahadur, a member of H.E.H. the Nizam's family. The question arose with reference to the assessment years 1969-70 to 1975-76. The late Nizam established several trusts for the benefit of his heirs, relations and others. One of the trusts so created is H. E. H. the Nizam's Prince Mukaram Jah, Prince Muffakkam Jah and Princess Dur-Re-Shewar Trust. In pursuance of the directions given in the trust deed, the trustees constructed a house on the land belonging to Chamilijah at a cost of Rs. 6,00,000. The assessee was entitled to live in the said house during his lifetime free of rent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... day of April, 1970, or any subsequent assessment year (i) animals ; (ii) a right to any annuity not being an annuity purchased by the assessee or purchased by any other person in pursuance of a contract with the assessee in any case where the terms and conditions relating thereto preclude the commutation of any portion thereof into a lump sum grant; (iii) any interest in property where the interest is available to an assessee for a period not exceeding six years from the date the interest vests in the assessee:..." The expression "net wealth" is defined in clause (m) in the following words : " 'net wealth' means the amount by which the aggregate value computed in accordance with the provisions of this Act of all the assets, wherever ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oes not include those specifically mentioned in the said definition. According to section 7, the value of any asset shall be estimated to be the price which in the opinion of the Assessing Officer, it would fetch if sold in the open market on the valuation date. This determination shall of course be made in accordance with the rules made in this behalf. Rule 1B of the Wealth-tax Rules provides the mode of determining the value of life interest. Rule 1B reads thus : "1B. (1) For purposes of sub-section (1) of section 7, the market value of the life interest of an assessee shall be arrived at by multiplying the average annual income that accrued to the assessee from 1 the life interest by (1/p+d)-1 where 'P' represents the annual premium fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s derived." The Tribunal was of the opinion that rule 1B is not workable in the present case and cannot, therefore, be applied. The Tribunal further held that where income does not actually come from a definite source or where the assessee does not have the right to receive income from a definite source, it cannot be said that he derives income. The Tribunal also held that if a person is entitled to stay in a house free of rent, it cannot be said that he is deriving income thereby; may be he is saving expenditure, but it does not amount to deriving income within the meaning of rule 1 B. It is contended by learned standing counsel for the Revenue that the right to live in a house free of rent is also an "asset." He submitted that the fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest. This of course does not mean that an asset should be excluded altogether from computation. Even if the said rule does not apply, an asset must still be valued and must be included in the wealth of the assessee if it satisfies section 7(1). The question then is whether it is an "asset" within the meaning of section 7(1), and as defined in clause (e) of section 2. We have already referred to the fact that the assessee has no right to dispose of the said interest in any manner. His only right is to live in the house and nothing more. Can it be called an asset ? We find that a similar question was considered by a Bench of this court on an earlier occasion in R. C. No. 69 of 1969, disposed of on November 5, 1971. Under one of the trust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he right to withdraw the jewels from her any time they like and sell them. No doubt the income from the sale proceeds will have to be paid to the Shahebzadi but the Shahebzadi herself has no voice on the question whether the jewels may or may not be sold. Her interest in the jewels is limited to being allowed to wear them if the trustees do not withdraw them from her. To our minds, the interest appears to be of a permissive nature and cannot be called property, however widely the expression may be interpreted." We are of the opinion that the said reasoning applies equally to the interest of the assessee concerned herein. Here too the interest of the assessee is in the nature of a licence. He can only live there. He cannot dispose of the sai ..... X X X X Extracts X X X X X X X X Extracts X X X X
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