Impartible estate status and Wealth-tax deeming fiction fail where title vests in the dynasty, not a single heir

A covenant vesting legal title in the dynasty, rather than in a single heir, means the property does not retain the character of an impartible estate after the Hindu Succession Act, 1956. On that footing, the deeming fiction under section 4(6) of the Wealth-tax Act, 1957 cannot treat the assessee as the holder of the estate. The discussion treats the earlier income-tax reasoning as comparable, but the decisive point is the covenantal mode of devolution and the statutory effect of section 4 of the Hindu Succession Act.

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Issues: Whether Darbargadh was an impartible estate and whether the assessee was its holder for the purpose of section 4(6) of the Wealth-tax Act, 1957.

Analysis: The covenant showed that the legal title to the property vested in the dynasty and not in the assessee as a single heir. On the application of section 4 of the Hindu Succession Act, 1956, such property did not continue as an impartible estate within the meaning of section 5(ii), and the legal fiction under section 4(6) of the Wealth-tax Act could not be invoked. The earlier reasoning under section 27(ii) of the Income-tax Act, 1961 was treated as materially comparable, but the decisive factor remained the covenantal devolution and the effect of the Hindu Succession Act.

Conclusion: Darbargadh was not an impartible estate for the purposes of section 4(6) of the Wealth-tax Act, 1957, and the assessee was not its holder within that provision. The question was answered in favour of the assessee.

Ratio Decidendi: Where a covenant vests legal title in the dynasty and the property does not devolve on a single heir, section 4(6) of the Wealth-tax Act, 1957 cannot deem the holder to be the individual owner because the property has ceased to retain the legal character of an impartible estate after the Hindu Succession Act, 1956.

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