TaxTMI 
TaxTMI 
1998 (3) TMI 18
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....sment years, namely, 1970-71 to 1974-75. The assessee is an individual. He executed a settlement deed dated November 12, 1959, in and by which, he created a life interest in respect of certain agricultural lands in favour of his wife, Sivakami Ammal, and the vested remainder in the said lands in favour of his brother-in-law's son, by name Velayutham. The settlement was acted upon, in the sense of the life estate-holder, namely, his wife, enjoying the income from the said agricultural lands. It appears that there was a difference of opinion between the assessee and his wife in or about the year 1969 and the difference of opinion so arisen continued for about three years. By way of purchase of peace and harmony, the spouses, namely, the ass....
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....ds in the net wealth of the assessee for the purpose of computation of the wealth-tax. The aggrieved assessee took up the matter on appeal before the Income-tax Appellate Tribunal, Madras Bench "B", Madras (for short "the Tribunal"), and the Tribunal, in turn, took the view that the value of life interest should not be added to the net wealth of the assessee, since it was held by the wife, in connection with the agreement to live apart and consequently cancelled the order of the Commissioner of Wealth-tax, by directing the inclusion of the value of the properties in the net wealth of the assessee. The Tribunal, in the alternative, also found that if at all anything is includible in the net wealth of the assessee, the value of the life int....
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....To put it otherwise, the assessee did not at all effect the transfer of title in respect of agricultural lands in favour of his wife and he had simply carved out a life interest in her favour in respect of those lands, leaving the vested remainder in favour of one Velayutham. The Assessing Officer, it appears, had committed a mistake in adding the value of the agricultural lands, in respect of which a life interest alone is created in favour of the wife, while determining the net wealth of the assessee in the computation of his wealth-tax. Section 4 of the Wealth-tax Act is captioned "net wealth to include certain assets". Section 4(1)(a)(i) and Explanation (a) thereto, which are relevant for our present purpose, read as under : "4. (1) I....
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....eof and where the property is converted into any other property by any method, such other property." A cursory glance or glimpse at the salutary provisions adumbrated under section 4(1)(a)(i) of the Wealth-tax Act would make it rather crystal clear that if transfer is made of any asset by the individual/assessee prior to the valuation date, directly or indirectly, either for adequate consideration or in connection with an agreement to live apart, such transferred assets are not includible in the net asset of the assessee in the computation of the wealth-tax. Explanation (a) appended to the said section explains the meaning of "transfer" for the purpose of the said section. "Transfer" for the purpose of the section may, of course, include ....
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.... the view that the answer to such a question cannot be any, other than the one in the negative, on the facts and in the circumstances of the case. The settlement deed dated November 12, 1959, contains relevant details of the agricultural lands, such as survey number, extent and the location, etc. In respect of those landed properties, as already adverted to, the assessee created a life interest in favour of his wife and the vested remainder in favour of one Velayutham, his brother-in-law's son. All the rights, the assessee had in those landed properties had been transferred, by way of life interest in favour of his wife and by way of vested remainder in favour of his brother-in-law's son, Velayutham. The settlement deed had already been ac....