Leasehold interest as taxable wealth asset where the tenancy extends beyond six years under wealth-tax law

A leasehold right in immovable property was treated as an asset under section 2(e) of the Wealth-tax Act, 1957, because it constituted an interest in property and was not within the exclusion for interests available for a period not exceeding six years. The lease in question ran for 21 years, so the tenant's right was chargeable to wealth-tax. The analysis followed the Supreme Court's recognition in P. N. Sikand that a leasehold interest can form part of the taxable net wealth, and the question was answered in favour of the Revenue.

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Issues: Whether the assessee's right as a tenant under the lease was an asset within the meaning of section 2(e) of the Wealth-tax Act, 1957.

Analysis: The lease created a right to enjoy immovable property and therefore constituted an interest in property within the meaning of the Transfer of Property Act. Under section 2(e) of the Wealth-tax Act, 1957, assets include property of every description, but exclude only interests in property available for a period not exceeding six years. The lease in question was for a period of 21 years, and the Supreme Court's pronouncement in P. N. Sikand recognised leasehold interest as an asset for wealth-tax purposes.

Conclusion: The assessee's leasehold right was an asset chargeable to wealth-tax and the question was answered in the affirmative in favour of the Revenue.

Ratio Decidendi: A leasehold interest in immovable property, where the interest extends beyond six years, is an asset within section 2(e) of the Wealth-tax Act, 1957.

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