COMMISSIONER OF WEALTH TAX Vs. H H VIJAYKUVERBA

JUDGEMENT

(1.) Income-tax Appellate Tribunal, Ahmedabad Bench, "A" has referred the following two questions at the instance of the Commissioner of Wealth-tax, under Section 27 of the Wealth-tax Act, 1957 (hereinafter to be referred to as "the Act").

(2.) The Assessment Years are 1975-76, 1976-77 and 1977-78 and the relevant valuation dates are 31st March, 1975, 31st March, 1976 and 31st March, 1977 respectively. The assessee is the executor of the estate of Late Shri Mahendrasinhji, the Ruler of Morvi. She filed return of wealth and in part IV pointed out that the New Palace at Morbi was exempt under Section 5 (1)(iii) of the Act. The Wealth-tax Officer accepted the assessee's claim. Commissioner of Wealth-tax initiated proceedings under Section 25(2) of the Act and held that the order of the Wealth-tax Officer was erroneous and prejudicial to the interests of the Revenue because the value of the New Palace palace at Morbi was included in the estate of Late Shri Mahendrasinhji, which remained to be administered on the valuation date; that Shri Mahendrasinhji had ceased to be the Ruler; that the assessee - H.H. Vijaykunvarba was the legal owner of the estate of which the palace formed a part, and as she was not the Ruler in occupation of the palace, the value of the palace was erroneously excluded from the net wealth. Similar orders were passed by the Commissioner for all the three years under consideration.

(3.) The assessee went in appeal before the Tribunal and the Tribunal, for the reasons recorded in its order held that the Commissioner of Wealth-tax was not justified in passing the revisional order under Section 25(2) of the Act, because firstly, there was no question of including the value of the New Palace at Morbi in the net wealth of the assessee, and secondly, even if the New Palace was treated as an asset of the assessee, the assessee will be entitled to claim exemption under Section 5 (1)(iii) of the Act.