Net wealth excludes uncrystallised compensation rights when no enforceable claim existed on the valuation date.

Compensation for properties seized in Bangladesh was not includible in net wealth where, on the relevant valuation dates, the assessee had no enforceable legal right to receive it and the compensation claim had not crystallised. The foreign government had taken over the properties, so the assessee lacked access and only a later payment was made. For wealth-tax purposes, only a legally subsisting right or asset existing on the valuation date can be brought to tax; a contingent or inchoate expectation is insufficient. The compensation was therefore excluded from the assessee's net wealth for the years under appeal.

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Issues: Whether the value of compensation receivable for properties seized in Bangladesh was includible in the assessee's net wealth on the relevant valuation dates, when the compensation was actually received only later.

Analysis: The properties had been taken over by the foreign government and the assessee had no access to them during the relevant years. The right to compensation had not crystallised on the valuation dates and there was no legal right then enforceable by the assessee. A mere subsequent payment of compensation could not convert the earlier position into an existing asset for wealth-tax purposes. The principle applied was that only a legally subsisting right or asset existing on the valuation date can be brought to tax in the computation of net wealth, and a contingent or inchoate expectation is not enough.

Conclusion: The compensation amount was not includible in the assessee's net wealth for the years under appeal and the finding was in favour of the assessee.

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