Ex gratia relief for properties left in Pakistan was not a valuable right and could not be included in net wealth.

Ad hoc ex gratia relief paid by the Government of India for properties left in Pakistan was not a taxable asset in net wealth because the assessee had no subsisting right, title or interest in the properties after vesting in Pakistan. The relief was expressly offered on a gratuitous, interim basis from the Consolidated Fund of India, was adjustable on restoration of the properties, and did not create an enforceable debt or actionable claim. On that basis, no valuable right capable of valuation arose for wealth-tax purposes, and the addition made by the first appellate authority was unsustainable.

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Issues: Whether the ad hoc ex gratia relief received from the Government of India in respect of properties left in Pakistan constituted an includible asset or valuable right in the assessee's net wealth for the assessment years in question.

Analysis: The properties in Pakistan had vested in the Government of Pakistan and the assessee had ceased to have any subsisting right, title or interest therein. The payment made by the Government of India was pursuant to a notice inviting claims for ad hoc interim relief from the Consolidated Fund of India, expressly on an ex gratia basis and not as payment of an enforceable legal entitlement. The notice itself indicated that the relief was gratuitous, adjustable on restoration of properties, and not a legally enforceable debt or claim. In that setting, no actionable claim or valuable right accrued to the assessee capable of valuation for wealth-tax purposes. The Board's Circular No. 385 also supported the view that such ex gratia interim relief was not assessable to wealth-tax because there was no legally enforceable claim to the relief.

Conclusion: The alleged right to receive ex gratia relief was not includible in the assessee's net wealth, and the addition sustained by the first appellate authority was not justified.

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