NAVNITLAL SAKARLAL Vs. COMMISSIONER OF WEALTH TAX

JUDGEMENT

(1.) THIS reference, made at the instance of the assessee under S. 27(1) of the WT Act, 1957 (hereinafter referred to as "the Act"), relates to the assessment to wealth tax made on the assessee for the asst. yrs. 1963 64 and 1964 65, in respect of certain properties which devolved upon him under a will and the principal consideration is :

(2.) IT is necessary to state a few facts in order to appreciate the points raised for our determination and they may be first set out. One Balabhai Damodardas was the grand father of the assessee. He was possessed of considerable movable properties acquired by his personal skill and labour and held in his individual capacity. Besides, Balabhai had one half share in the coparcenary properties belonging to the Hindu undivided family of which be was the Karta. The remaining one half share in the said coparcenary properties belonged to one Sakarlal Balabhai, father of the assessee and son of Balabhai. On 6th Oct., 1956, Balabhai executed a will which in substance provided that after discharging all debts, liabilities and obligations and after meeting expenses of illness, obsequial ceremonies and disbursing charities out of his self acquired properties, the said properties as also his right, title and interest in the coparcenary properties would on his death devolve upon his two grandsons (the assessee and his brother) and that they would become entitled to use and enjoy the same. It may be stated that no person was named as administrator or executor in the will and that the provision in the will was that the legatees themselves should take possession of the properties of the testator on his death. Balabhai died on 31st Dec., 1957, leaving behind as his next of kin a son (Sakarlal), three daughters and a number of grand children including the assessee and his brother. This fact, which was not on record of the case before the Tribunal, emerges from a chart or table which was produced by the assessee at the hearing of this reference and which was taken on record with the consent of the Revenue and marked exhibit I. On the death of Balabhai, his son, Sakarlal, took charge of the properties left behind by the deceased and started administering them. By an order made on 30th Dec., 1961, an amount of Rs. 1,04,619.95 was determined as the estate duty payable on the properties passing on the death of Balabhai. It is not in dispute that on the relevant valuation dates with which we are concerned in the present reference, the estate duty liability was not fully discharged since a sum of Rs. 53,444.63 only was paid towards the estate duty and the balance of Rs. 51,175.32 still remained to be paid out of the estate of the deceased. To that extent, there was a first charge on the immovable properties left behind by the deceased under s. 74 of the Estate Duty Act, 1953.

(3.) THE assessee is individually also liable to be assessed to wealth tax and in the course of proceedings for assessment to wealth tax for the two assessment years in question the WTO computed the net wealth of the assessee by including therein the assessee's one half share in the estate of deceased Balabhai to which he became entitled under the will. The net wealth of the assessee for the two assessment years in question was accordingly determined after adding amounts of Rs. 5,33,044 and Rs. 4,95,899 respectively, being one half of the value of the net wealth of deceased Balabhai as determined in the protective assessment proceedings for the said two years, and wealth tax was levied accordingly. It may be stated that the WTO took the above mentioned step on the view that one half share of the assessee in the estate left behind Balabhai passed to him immediately on the death of Balabhai and that merely because there was no physical division of the properties between the assessee and his brother and the estate was being administered by the father of the assessee it could not be said that the assessee had not acquired any right, title or interest to the extent of his share in the properties left behind by deceased Balabhai. In the opinion of the WTO, the father of the assessee was "at the most" holding the estate as a trustee and the shares of the beneficiaries being certain and definite, one half share of the assessee in the estate of the deceased was liable to be subjected to wealth tax in the hands of the assessee.