Impartible estate and wealth-tax: palace excluded from net wealth before the deeming fiction, but included after its commencement.

Under the Wealth-tax Act, an impartible estate was not treated as the assessee's exclusive personal property for net wealth purposes before the statutory deeming fiction in section 4(6) came into force. The Darbargadh palace, held under custom of impartibility and inalienability, was therefore outside the assessee's net wealth for the assessment years 1959-60 to 1964-65, but became includible from assessment year 1965-66 when the deeming provision commenced. Because the statutory fiction operated only prospectively from 1 April 1965, no separate question of assessability of a life interest survived for the earlier years.

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Issues: Whether the value of the Darbargadh palace was includible in the assessee's net wealth for the assessment years 1959-60 to 1965-66, and whether any life interest in the property was separately assessable.

Analysis: The assessable net wealth under section 2(m) of the Wealth-tax Act, 1957, extends only to assets belonging to the assessee on the valuation date. The Darbargadh was held under a custom of impartibility and inalienability, and the governing principle was that an impartible estate, though subject to special incidents, does not become the holder's separate or exclusive property merely because partition and alienation are excluded. The Court treated the later insertion of section 4(6) of the Wealth-tax Act, 1957, as introducing a deeming fiction and not as a declaratory statement of the pre-existing law. That provision could operate only from 1 April 1965. On that basis, no separate life interest question survived for the earlier years.

Conclusion: The value of the Darbargadh was not includible in the assessee's net wealth for the assessment years 1959-60 to 1964-65, but it was includible for the assessment year 1965-66. The question of a separate life interest did not arise.

Ratio Decidendi: An impartible estate is not the holder's exclusive personal property for wealth-tax purposes before the statutory deeming fiction in section 4(6) of the Wealth-tax Act, 1957, and that fiction operates only from its commencement.

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