Law:

Section:

Section 5(1)(iv) of the wealth-tax act, 1957-exemption-residential house-whether house in which assessee has only life interest is eligible for exemption-held, yes Facts The assessee owned a life interest in a number of houses on the relevant valuation date and claimed exemption under section 5(1)(iv) in respect of one of the houses. The WTO refused the exemption on the ground that the assessee was only a life-tenant of the house. On appeal, however, the Tribunal held that even a mere life interest in the house was entitled to exemption. On reference: Held The expression 'assets' is defined in the Wealth-tax Act as including property of every description, both movable and immovable. It is an axiom of property law that property includes any interest in property. Property, in this sense, may be regarded as a bundle of proprietary interest or rights. Any one of those interests will itself be property, and hence has to be included in the connotation of 'assets'. A life interest is a 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. Undoubtedly, 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, the exemption under section 5(i)(iv) could not be withheld from him. Accordingly, the assessee in the instant case was entitled to the exemption in respect of life interest owned by it in the impugned house property. Case review M. Thirumani Mudaliar v. CWT [1974] 96 ITR 152 (Mad.) and A & F Harvey Ltd. v. CWT [1977] 107 ITR 326 (Mad.)distinguished. Cases referred to A & F Harvey Ltd. v. CWT [1977] 107 ITR 326 (Mad.) and M. Thirumani Mudaliar v. CWT [1974] 96 ITR 152 (Mad.). Judgment Balasubrahmanyan, J. - The assessee in this wealth-tax reference owned a life interest in a number of houses on the relevant valuation date, namely, 31-3-1973. For the assessment year 1973-74, he claimed exemption under section 5(1)(iv) of the Wealth-tax Act, 1957 ('the Act') in respect of one of the houses. The WTO refused the exemption on the ground that the assessee was only a…

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