Deemed ownership under wealth tax applies only to qualifying long-term leases; short leases and licences stay with the legal owner.

Section 4(8)(b) of the Wealth-tax Act creates a strict deeming fiction that shifts ownership only when the transaction falls within section 269UA(f) of the Income-tax Act. A lease qualifies only if it is for not less than twelve years, including extended terms that aggregate to that period; short-term leases do not transfer deemed ownership, so the legal owner remains assessable. The parenthetical exclusion preserves this result for leases from month to month or not exceeding one year. A pure leave and licence arrangement does not transfer an interest in property and falls outside the deeming provision, leaving the licensor as owner for wealth-tax purposes.

---

---

Issues: (i) Whether, for wealth-tax purposes, an immovable property leased or licensed for less than twelve years is includible in the net wealth of the owner or the transferee under section 4(8)(b) of the Wealth-tax Act read with section 269UA(f) of the Income-tax Act; (ii) whether the parenthetical exclusion in section 4(8)(b) of the Wealth-tax Act governs the nature of the transaction so as to keep leases of less than twelve years outside the deeming provision; (iii) whether a leave and licence arrangement with extension clauses falls within section 4(8)(b) of the Wealth-tax Act and section 269UA(f) of the Income-tax Act.

Issue (i): Whether, for wealth-tax purposes, an immovable property leased or licensed for less than twelve years is includible in the net wealth of the owner or the transferee under section 4(8)(b) of the Wealth-tax Act read with section 269UA(f) of the Income-tax Act.

Analysis: Section 4(8)(b) creates a deeming fiction and operates only where the transferee acquires rights by virtue of a transaction falling within section 269UA(f). That provision treats a lease as a transfer only where it is for a term of not less than twelve years, including extended terms that aggregate to that period. Where the term is below that threshold, the statutory fiction does not shift ownership from the legal owner to the transferee. The general rule under the wealth-tax charging provisions therefore continues to apply.

Conclusion: The legal owner remains liable where the lease is for less than twelve years, and the transferee becomes the deemed owner only where the lease is for not less than twelve years.

Issue (ii): Whether the parenthetical exclusion in section 4(8)(b) of the Wealth-tax Act governs the nature of the transaction so as to keep leases of less than twelve years outside the deeming provision.

Analysis: The words excluding rights by way of lease from month to month or for a period not exceeding one year are expressed in clear terms and do not require a strained purposive construction. The exclusion does not nullify the main clause; instead, it reinforces that only transactions within section 269UA(f) attract the deeming fiction, while the excluded categories remain outside it. The provision is an exception to the normal rule of taxation of the legal owner and must be applied strictly.

Conclusion: The parenthetical exclusion is effective and preserves the liability of the legal owner for leases falling below the statutory threshold.

Issue (iii): Whether a leave and licence arrangement with extension clauses falls within section 4(8)(b) of the Wealth-tax Act and section 269UA(f) of the Income-tax Act.

Analysis: A leave and licence does not transfer an interest in the property and does not confer possession in the manner of a lease. Section 269UA(f) speaks of transfers by sale, exchange, or lease for not less than twelve years, and the statutory fiction in section 4(8)(b) is confined to that class of transactions. A pure licence is therefore materially different from a lease and cannot attract deemed ownership.

Conclusion: Leave and licence arrangements fall outside section 4(8)(b) and the licensor remains the owner for wealth-tax purposes.

Final Conclusion: The statutory fiction of deemed ownership applies only to qualifying long-term leases under section 269UA(f), while short-term leases and leave and licence arrangements remain with the legal owner for wealth-tax assessment.

Ratio Decidendi: Deeming provisions that shift ownership for tax purposes must be strictly construed and operate only within the precise statutory conditions prescribed by the incorporated transfer provision; transactions outside those conditions do not divest the legal owner.

---