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TMI Blog1985 (12) TMI 24X X X X Extracts X X X X X X X X Extracts X X X X ..... oned above, shall enjoy the property till her lifetime without subjecting the same to any encumbrance. After the lifetime of both of them, parties Nos. 3, 4, 5 and 6 shall get the property in their absolute right. Since the above persons have to enjoy the property as co-owners, if any one of them wishes to sell his share, he will have to sell the same to all or any of the other three persons. " Two of the minor sons who became major later constituted a Hindu undivided family consisting of the individuals, their wives and children. In respect of the assessment years 1968-69 and 1969-70, each of them separately submitted the returns under the Wealth-tax Act and claimed deduction in the returns of a sum of Rs. 1,00,000 under section 5(1)(iv) of the Wealth-tax Act in respect of the house which is item No. 1 of schedule A to the partition deed above stated. The Wealth-tax Officer rejected this claim on the ground that Ranganayaki Ammal, the assessee's mother, has a life interest and " she being a life tenant, the assessee could not use the bungalow for residential purposes and only the life tenant could use it for residential purposes ". The Wealth-tax Officer was further of the view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as known to law and that the assessees cannot claim the property as belonging to the joint family, though they are entitled to claim the same after the death of Ranganayaki Ammal. Accordingly, the Bench had also directed the Tribunal to file a supplemental statement of the case after calling for the partition deed dated December 31, 1951, and after giving a finding as to whether Ranganayaki Ammal was given a life interest or merely a right of residence in respect of the house with respect to the applicability of section 5(1)(iv). In response to this order, the Tribunal has given a supplemental statement of the case in which, after extracting the terms in the partition deed which we have quoted above, the Tribunal has simply stated that they find from the above partition deed that Smt. Ranganayaki Ammal was given a " life estate " in the house in question. Section 5(1)(iv) during the relevant assessment years read as follows: " 5. (1) Subject to the provisions of sub-section 1(A), wealth-tax shall not be payable by an assessee in respect of the following assets, and such assets shall not be included in the net wealth of the assessee- . ...... (iv) one house or part of a house ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sense, there is a restriction on their right to transfer. The parties have intended that the house will have to be enjoyed by occupation by all the persons as co-owners and in the light of that expectation to enjoy the property as co-owners, each of these sons also was restrained from alienating his rights in favour of third parties and if he wanted to sell, he has to sell it to the other co-owners. Thus, though this vested remainder vested in the sons, as held in Seethayamma v. Vullipalem, AIR 1939 Mad 802, it is property and it is immovable property capable of being alienated by the holder of that interest or by anybody authorised by him to sell it to anybody as he feels and in view of the restriction placed under the document, they also had to enjoy it as co-owners with the right of alienation restricted to sell the same to the other co-owners. The purpose is achieved so far as the mother, Ranganayaki Ammal, is concerned by restricting her right to the residence alone and without allowing her to encumber. In fact, even while referring to her interest, it is said she shall enjoy the property till her lifetime without subjecting the same to any encumbrance. We have, therefore, no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has to be included in the connotation of 'assets'. A life interest is fractional interest in property, falling short of the entire interest in it. It is a well-known species of property under many systems of law, ancient and modern. The idea of a life interest perhaps emerged out of the recognition that property, especially immovable property, tends to outlast the span of human life or lives. We have no doubt whatever that a life interest in house property is an interest in the house. It follows that in a case where the house in question is lived in by the life-tenant, we do not see how exemption can be withheld from him under s. 5(1)(iv). " It may be seen from this passage that even if we agree with the Tribunal that the interest conveyed to Ranganayaki Ammal was a life interest, it would not make any difference. A life interest, as stated above, is a fractional interest in property and, therefore, it is an interest in the house itself. Learned counsel for the Revenue, relying on certain observations of the Supreme Court in CWT v. Trustees of H. E. H. Nizam's Family (Remainder Wealth) Trust [1977] 108 ITR 555, contended that the vested right conferred on the sons cannot be equ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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