Pendente lite interest and net wealth: a reversed decree extinguishes the enforceable property right for wealth-tax purposes.

Pendente lite interest awarded under a civil decree does not constitute an asset belonging to the assessee for wealth-tax purposes once the decree is later set aside. Wealth-tax applies only to the aggregate value of property owned by the assessee on the valuation date, and a bare or extinguished right to receive interest is not transferable property or an enforceable asset. Where the High Court reverses the trial court decree, the right to retain the interest also falls away, so mere possession of the does not convert it into net wealth. On that basis, the interest amount was not includible in net wealth and the related additions remained deleted.

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Issues: Whether pendente lite interest received under trial court decrees, later set aside by the High Court, constituted an asset belonging to the assessee and was includible in net wealth.

Analysis: Wealth-tax is chargeable only on net wealth, meaning the aggregate value of assets belonging to the assessee on the valuation date. An asset under the Wealth Tax Act includes property of every description, but a mere right to sue is not transferable property within the meaning of section 6(e) of the Transfer of Property Act, 1882. A right to pendente lite interest arises only when a civil court, in its discretion under section 34 of the Code of Civil Procedure, 1908, awards such interest. Before decree, no enforceable claim to such interest exists; if the decree is later set aside, the right to retain the interest also ceases. On that footing, the amount received under the trial court decrees did not remain the assessee's property after reversal by the High Court, and mere possession could not convert it into an asset belonging to him.

Conclusion: The pendente lite interest was not includible in the assessee's net wealth, and the deletion of the additions was in substance and remained undisturbed.

Ratio Decidendi: A right to receive pendente lite interest under a decree is not an asset belonging to the assessee for wealth-tax purposes once the decree is set aside, because wealth-tax attaches only to property in which the assessee has ownership and not to a bare or extinguished claim.

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