Law:

Section:

Section 4(6) of the wealth-tax act, 1957 [inserted with effect from 1-4-1965]-Impartible estate-Assessment years 1959-60 to 1965-66-Assessee, as ruler of morvi, became entitle to use certain palace which was inalienable and impartible-Whether value of palace includible in net wealth of individual assessee-Held, on facts, no qua assessment years prior to assessment years 1965-66 and "yes" qua assessment year 1965-66 Facts The assessee became the ruler of Morvi on the death of his father on 17-8-1957 and, as such, became entitle to use Darbargadh, a palace in a small town for residence. The legal title of Darbargadh always vested with the dynasty of the ruler and the property was inalienable and impartible. In his wealth-tax assessment proceedings for the assessment years 1959-60 to 1965-66, the assessee pleaded for fixing a nominal value of this palace as the same was not readily saleable and/or would not fetch the same price which it could if it was located in a city. The WTO, however, included in the net wealth the value of Rs. 5,50,000 agreed to by the assessee's father in his wealth-tax assessment for the assessment year 1957-58. On appeal, the AAC excluded the value of the palace, holding (i) that the legal title of Darbargadh was to vest with the ruler's dynasty and the property was inalienable and impartible and; (ii ) that the assessee, as a ruler, had only a personal right to use the palace as is official residence and this right had no market value. The Tribunal confirmed the AAC's order for similar reasons after negativing the revenue's contention that the ruler's right should at least be valid as a life interest. On reference, the revenue contended (i) that, notwithstanding the fact that the property was impartible, it must be considered as belonging to the ruler himself in the absense of essential ingredient of a joint family property, viz., the right of a coparcener to claim partition or challenge alienation; (ii) that section 4(6), introduced with effect from 1-4-1965, was a declaratory provision merely declaring the pre-existing legal position that the holder of an impartible estate would be deemed to the individual owner of all the properties…

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