Tribunal denies exemption for property purchase but allows exemption for deposited sale proceeds

The Tribunal denied exemption under s. 5(1)(iv) of the Wealth Tax Act for a house property as the assessee did not fully pay for the property and lacked immediate transfer of ownership. However, exemption under s. 5(1)(xxvi) was allowed for Rs. 35,000 deposited in the bank account from the sale proceeds of a house in Calcutta, reducing the bank balance in the assessee's net wealth.

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Issues:
1. Exemption claim under s. 5(1)(iv) of the Wealth Tax Act for a house property.
2. Exemption claim under s. 5(1)(xxvi) of the Wealth Tax Act for the amount deposited in the assessee's bank account.

Analysis:
1. The first issue pertains to the assessee's claim for exemption under s. 5(1)(iv) of the Wealth Tax Act in relation to a house property. The dispute arose as the property had not been legally conveyed to the assessee, and the authorities included the amount paid towards the purchase of the house in the assessee's net wealth. Despite the assessee's possession and partial payment, the Tribunal relied on a Supreme Court judgment (Nawab Sir Mir Osman Ali Khan vs. CWT) where it was held that mere possession does not establish ownership. The Tribunal found that since the entire consideration was not paid, and the possession was not for immediate transfer of ownership, the property could not be considered owned by the assessee. Therefore, the Tribunal upheld the authorities' decision denying exemption under s. 5(1)(iv) to the assessee.

2. The second issue revolves around the exemption claim under s. 5(1)(xxvi) of the Wealth Tax Act concerning the amount deposited in the assessee's bank account. The assessee argued that the balance in the bank account was from the sale proceeds of a house in Calcutta and should be exempt under s. 5(1)(xxvi). The assessee provided evidence of the sale proceeds being deposited in the bank account and withdrawals made for the purchase of another house. The Tribunal noted that the transactions were reflected in the bank account, and a portion of the balance could be attributed to the sale price of the Calcutta house. Therefore, the Tribunal allowed the exemption for the deposit of Rs. 35,000, reducing the bank balance included in the assessee's net wealth. Consequently, the Tribunal partially allowed the appeal, granting exemption under s. 5(1)(xxvi) for the specific amount deposited in the bank account related to the sale proceeds of the Calcutta house.

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