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Issues: (i) Whether the assessee was taxable as an individual in respect of the impartible estate properties, and whether the compensation payable under the abolition scheme retained the character of joint family property; (ii) whether the balance compensation not finally quantified during the valuation dates constituted a debt includible in net wealth.
Issue (i): Whether the assessee was taxable as an individual in respect of the impartible estate properties, and whether the compensation payable under the abolition scheme retained the character of joint family property.
Analysis: An impartible estate, though ancestral, is not coparcenary property in the ordinary sense and, apart from the limited incident of succession, is treated as the holder's separate property. The statutory scheme governing abolition and compensation did not preserve the full character of joint family property in the compensation amount. Section 45 of the abolition law created only a limited fiction for apportionment among specified sharers and maintenance-holders. That fiction could not be extended to make the compensation, once received by a sharer, joint family property in his hands. The later taxing provision deeming the holder of an impartible estate to be the individual owner also supported that construction.
Conclusion: The assessee was correctly treated as an individual in respect of the admitted impartible items, namely the Prince of Wales Market and the regalia jewellery, and any other property found on inquiry to be impartible would also be assessable in his individual status; only partible assets, if any, would belong to the joint family.
Issue (ii): Whether the balance compensation not finally quantified during the valuation dates constituted a debt includible in net wealth.
Analysis: A present obligation to pay an ascertainable sum, even if quantified later, is a debt in law. The unpaid balance of compensation under the abolition scheme represented an existing liability of the State to the assessee and was therefore an asset capable of inclusion in net wealth. The later final determination of the amount confirmed the ascertainable character of the claim.
Conclusion: The unpaid balance of compensation was a debt and was rightly included in the assessee's net wealth.
Final Conclusion: The reference was answered partly in favour of the assessee on the status issue and in favour of the revenue on the compensation issue, with costs left to lie where they fell.
Ratio Decidendi: A statutory fiction created for distribution of compensation from an abolished impartible estate is confined to that purpose and does not convert the compensation received by a sharer into joint family property in his hands; an existing and ascertainable compensation liability is a debt includible in net wealth.
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