Law:

Section:

Section 7, read with section 21, of the Wealth-tax Act, 1957 - Valuation of assets - Life Interest - Whether where assessees are beneficiaries of a trust, while valuing their interest in trust properties, probable estate duty payable on death of life-tenant has to be taken into account and value of property would be diminished by that for charge of wealth-tax in hands of remainderman - Held, yes - Whether rate of interest as given in wealth-tax rules for valuation of life interest is applicable to a case where corpus is jewellery, which is an appreciable asset - Held, yes FACTS The assessees were all beneficiaries of a trust. They returned the value of their interest in the trust properties on the basis of the valuer's report. The WTO accepted the return. However, the Commissioner considered such assessments to be erroneous and prejudicial to the interest of revenue. The view of the department was that the valuation made by the assessees' valuer was incorrect for three reasons, namely, that the estate duty payable on the death of the life-tenant was wrongly deducted; that no adjustment had been made for appreciation in the value of the property; and that the interest rate was wrongly taken at 6½ per cent for the purpose of actual valuation. On appeal, the Tribunal rejected these three grounds on finding that the accepted method of valuing the remainderman's interest included a deduction of the estate duty, that the value had been taken on the basis of the Department Valuer's report and so did not call for appreciation and that the interest rate adopted was given in the table annexed to the Wealth-tax Rules, 1957 itself. On reference : HELD According to section 21, wealth-tax has to be levied on the trustee in the like manner and to the same extent as it would be leviable upon and recoverable from the person on whose behalf or for whose benefit the assets are held. In the instant case, the beneficiaries were remaindermen, who were entitled to the benefit only on the death of the life-tenants. These remaindermen had earlier taken the stand that since the property did not devolve on the remainderman till the life-time of the life-tenant, they would not be liable…

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