Wealth-tax exemption depends on the statute itself; merger assurances cannot create a further exemption for property

Exemption from wealth-tax was available only where the taxing statute itself granted it, and merger assurances or allied privileges could not override that scheme. The assessee's reliance on the merger agreement and assurance letter failed because those instruments were not law in force for assessment purposes. Under section 5(1)(iii), the ruler's exemption extended only to one building declared as the official residence under the Merged States (Taxation Concessions) Order, 1949, and that benefit had already been allowed for Ramnagar Palace. Articles 291 and 362 did not support a further exemption for Nandeswar House, which remained includible in net wealth.

---

---

Issues: Whether the value of the assessee's Nandeswar House was exempt from wealth-tax on the basis of the merger agreement and the accompanying assurance letter, or whether only the statutory exemption under section 5 of the Wealth-tax Act applied.

Analysis: The claim for exemption rested not on any exemption specifically created by the Wealth-tax Act, but on the merger agreement and the letter of assurance stating that the property would remain exempt from property or other municipal taxation. The Court held that such assurances could not be treated as law in force for the purposes of assessment. In wealth-tax matters, exemption can be granted only if the Act itself so provides. Under section 5(1)(iii), a ruler was entitled to exemption only in respect of one building declared as the official residence under paragraph 13 of the Merged States (Taxation Concessions) Order, 1949, and that exemption had already been allowed for the Ramnagar Palace. The reliance on Articles 291 and 362 did not assist the assessee in claiming a further exemption outside the Act.

Conclusion: The Nandeswar House was not exempt from inclusion in net wealth, and the reference was answered against the assessee.

Ratio Decidendi: Exemption from wealth-tax can be claimed only when authorized by the taxing statute, and merger assurances or allied privileges not enacted as law cannot override the statutory scheme.

---