Possession with enforceable enjoyment rights can make a flat belong to the assessee for wealth-tax exemption purposes.

A flat may be treated as belonging to an assessee for wealth-tax exemption under section 5(1)(iv) of the Wealth-tax Act, 1957 even if the sale deed has not yet been registered, where possession and related rights have been delivered. The decisive factor is not formal title alone, but possession coupled with enforceable rights to enjoy the property and derive rent from it. Where the transferee has obtained effective rights under an agreement of sale and the transferor has lost practical control, the asset is treated as belonging to the person in possession for wealth-tax purposes, making the exemption available.

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Issues: Whether the assessee was entitled to exemption under section 5(1)(iv) of the Wealth-tax Act, 1957 in respect of a flat not yet registered in her name but of which possession and related rights had been delivered.

Analysis: The expression used in section 5(1)(iv) is "belonging to the assessee" and not merely formal registered ownership. Property can be said to belong to a person where she has possession together with the right to enjoy the flat and derive rent from it, even if the sale deed has not yet been executed. The reasoning also accords with the principle that, where the transferee has obtained effective rights under an agreement of sale and the transferor has lost practical control over the property, the asset is treated as belonging to the person in possession and entitled to enjoy it.

Conclusion: The flat was held to belong to the assessee for wealth-tax purposes and exemption under section 5(1)(iv) was allowable.

Ratio Decidendi: For purposes of section 5(1)(iv) of the Wealth-tax Act, 1957, an asset belongs to the assessee when possession is accompanied by enforceable rights of enjoyment and income, even though legal title has not yet been formally registered.

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