Vesting of estate asset before valuation date excludes it from executor's net wealth under the wealth tax framework.

Property already vested in a legatee before the valuation date cannot be included in the executor's net wealth. The New Palace at Morvi had been recognised by notification as the official residence of the Ruler, and the record showed that it had devolved on the legatee on the relevant valuation dates. On that basis, the asset was not treated as belonging to the executrix for net wealth purposes. The Court also noted that section 19A(6) excluded from net wealth any estate asset already allotted or applied for the benefit of a legatee before the valuation date. The value of the palace was therefore excluded from the assessee's net wealth.

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Issues: Whether the value of the New Palace at Morvi could be included in the net wealth of the assessee.

Analysis: The Palace had been recognised by notification as the official residence of the Ruler, and the record showed that the property had already devolved on the legatee who was the Ruler on the relevant valuation dates. In such circumstances, the property could not be treated as belonging to the executrix for the purposes of net wealth. The Court also noted that even on the Revenue's reliance on the provisions governing estate administration, section 19A(6) excluded from net wealth any asset of the estate already allotted or applied for the benefit of a legatee before the valuation date.

Conclusion: The value of the New Palace at Morvi could not be included in the net wealth of the assessee, and the answer was in favour of the assessee.

Ratio Decidendi: An asset already allotted to or vested in a legatee before the valuation date cannot be included in the executor's net wealth, particularly where the property is recognised as the official residence of the Ruler and is not shown to belong to the estate on that date.

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