Wealth-tax ownership test excludes property from net wealth when possession and consideration pass before legal title.

For wealth-tax purposes, a factory building was held not to belong to the assessee-company on the valuation date where possession had been delivered and consideration received, even though a registered sale deed had not yet been executed. The amended wealth-tax provision treating assets "belonging to" a company was read as declaratory and clarificatory, so legal ownership was not confined to absolute title. Applying the principle that a vendee in possession with payment made may be treated as owner for the relevant purpose, the asset was excluded from the company's net wealth and the impugned addition was unsustainable.

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Issues: Whether the factory building was owned by the assessee-company on the relevant valuation date and was, therefore, liable to be included in its net wealth for wealth-tax purposes.

Analysis: The dispute turned on the effect of the amended wealth-tax provisions dealing with assets "belonging to" a company and on whether transfer of possession and receipt of consideration, though not accompanied by a registered sale deed, could take the asset outside the assessee's net wealth. The Court accepted the view that the expression "belonging to" is not confined to absolute legal title and that the amendment introduced to remove hardship in such cases was declaratory and clarificatory in nature. Relying on the retrospective character of the corresponding amendment recognised in the context of the Income-tax Act, and applying the principle that a vendee in possession with consideration paid can be treated as the owner for the relevant purpose, the Court held that the factory building could not be treated as belonging to the assessee-company on the valuation date.

Conclusion: The question was answered in the negative, against the Revenue and in favour of the assessee; the factory building was not liable to wealth-tax in the hands of the assessee-company.

Final Conclusion: The reference was disposed of by holding that the impugned addition could not be sustained in the assessee's wealth-tax assessment.

Ratio Decidendi: For wealth-tax purposes, an asset may cease to belong to the vendor-company when consideration is received and possession is delivered, even if legal title has not yet passed, where the governing amendment is declaratory and operates retrospectively.

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