Leasehold interests terminable by notice were not taxable wealth where availability beyond six years was unproven.

Leasehold interests continuing after expiry of the leases, and terminable by notice under the Transfer of Property Act, were not treated as assets includible in net wealth under section 2(e)(2)(iii) of the Wealth-tax Act, 1957. The decisive question was whether the interest, on the date of vesting, remained available for a period exceeding six years; a precarious month-to-month tenancy, liable to termination at any time, did not satisfy that test. The value of such properties was therefore not includible in net wealth, and the Tribunal was held wrong to tax the interest as an asset.

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Issues: (i) Whether leasehold properties, after expiry of the leases and service of notices to hand over possession, constituted assets includible in the assessee's net wealth under section 2(e)(2)(iii) of the Wealth-tax Act, 1957. (ii) Whether the assessee's interest in the properties was available for a period exceeding six years within the meaning of section 2(e)(2)(iii) of the Wealth-tax Act, 1957.

Issue (i): Whether leasehold properties, after expiry of the leases and service of notices to hand over possession, constituted assets includible in the assessee's net wealth under section 2(e)(2)(iii) of the Wealth-tax Act, 1957.

Analysis: The relevant provision excludes an interest in property if it is available to the assessee for a period not exceeding six years from the date the interest vests. The tenancy that continued after expiry of the leases was treated as a month-to-month tenancy under the Transfer of Property Act and was liable to termination at any time by notice. A merely continuing occupation, without more, did not convert the interest into an asset falling within the chargeable category when its duration was not shown to extend beyond six years from vesting.

Conclusion: The properties were not assets within section 2(e)(2)(iii) and their value was not includible in the assessee's net wealth.

Issue (ii): Whether the assessee's interest in the properties was available for a period exceeding six years within the meaning of section 2(e)(2)(iii) of the Wealth-tax Act, 1957.

Analysis: The expression was construed to look to the nature of the interest on the relevant date and to require that the interest remain available in future for a period not exceeding six years. The fact that the lessor had not yet terminated the tenancy did not mean that the interest was available for more than six years. On the facts, the tenancy being terminable by notice under the Transfer of Property Act remained precarious and could not be treated as an interest available beyond the statutory period.

Conclusion: The assessee's interest was not one available for a period exceeding six years, and the Tribunal was wrong to treat it as taxable assets.

Final Conclusion: The appeal succeeded on the core wealth-tax issue, and the assessment of the leasehold interests in the assessees's net wealth was set aside.

Ratio Decidendi: For purposes of section 2(e)(2)(iii) of the Wealth-tax Act, 1957, the character of the interest on the date of vesting is decisive, and an interest terminable at any time by notice is not an asset unless it is shown to remain available for a period exceeding six years from that date.

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