Wealth-tax on confiscated gold and litigation rights fails where property is absent on the valuation date and valuation is uncertain.

Under the Wealth-tax Act, confiscated gold was not includible in net wealth on the relevant valuation dates because chargeability depends on real wealth existing on that date, and retrospective or deemed ownership could not be used to tax property no longer belonging to the assessee. The later restoration of the gold did not create ownership by relation back for wealth-tax purposes. A mere right to litigate for recovery was also not a taxable asset, because it was inchoate, uncertain in value, and not capable of reasonable valuation. The revenue's attempt to tax that right on an arbitrary basis was therefore unsustainable.

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Issues: (i) Whether gold confiscated under the Gold (Control) law could be included in the assessees' net wealth on the relevant valuation dates under the Wealth-tax Act; and (ii) whether the assessees' right to litigate for recovery of the gold constituted a taxable asset capable of valuation.

Issue (i): Whether gold confiscated under the Gold (Control) law could be included in the assessees' net wealth on the relevant valuation dates under the Wealth-tax Act.

Analysis: The charge under the Wealth-tax Act is on real wealth as existing on the valuation date, and the inclusion provisions cannot be extended by a retrospective or deemed ownership theory unless the statute so provides. The confiscated gold had been taken out of the assessees' possession long before the relevant valuation dates, and no finding of illegality nullifying the confiscation for wealth-tax purposes was available. The later restoration of the gold in writ proceedings did not justify treating the assessees as owners of the gold on the earlier valuation dates, and the doctrine of relation back was held inapplicable to fasten wealth-tax liability on property not then belonging to them.

Conclusion: The confiscated gold was not includible in the assessees' net wealth on the relevant valuation dates.

Issue (ii): Whether the assessees' right to litigate for recovery of the gold constituted a taxable asset capable of valuation.

Analysis: A mere right to litigate or a right to sue is not an asset in the ordinary sense for wealth-tax purposes, particularly where its value is uncertain and depends on the hazards of prolonged litigation. The claimed right was inchoate and incapable of reasonably accurate valuation, so it could not be brought within the charging provision or valued at an arbitrary percentage of the gold's market value.

Conclusion: The right to litigate was not a taxable asset and the valuation adopted for it was unsustainable.

Final Conclusion: The revenue's appeals failed and the assessees obtained relief against inclusion of the confiscated gold as well as against taxation of the alleged litigation right.

Ratio Decidendi: Under the Wealth-tax Act, only property that constitutes real wealth belonging to the assessee on the valuation date can be brought to tax, and a mere right to litigate, being inchoate and not reasonably capable of valuation, is not a taxable asset.

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