1981 (8) TMI 9 - HC - Wealth-tax

Summary

Issues Involved:
1. Ownership of Kunj Bungalow.
2. Ownership and wealth-tax liability of Jay Mahal Palace.
3. Ownership and wealth-tax liability of Makarpura Palace.

Detailed Analysis:

Issue 1: Ownership of Kunj Bungalow
The Tribunal determined whether the immovable property known as Kunj Bungalow was the property of the assessee or held on behalf of the firm M/s. Gaekwad & Co., Baroda, on the relevant valuation date. The court referred to its previous judgment in CIT v. Kartikey V. Sarabhai, establishing that the Kunj Bungalow was introduced as capital contribution by the assessee to the firm and credited to his account. Consequently, the property ceased to be the assessee's and became the firm's property. The court upheld the Tribunal's view that the assessee was not obligated to include the said asset in his net wealth, affirming the decision in favor of the assessee.

Issue 2: Ownership and Wealth-Tax Liability of Jay Mahal Palace
The Tribunal examined whether the assessee continued to be the legal owner of Jay Mahal Palace on the relevant valuation dates and if its market value should be included in the wealth-tax returns for the assessment years 1964-65, 1965-66, and 1966-67. Despite the agreement to sell the property and the payment of earnest money, the court found that the title did not transfer to the purchasers merely by part payment and possession. The court emphasized that the legal title remained with the assessee until the execution of a registered conveyance. The court cited its decision in CIT v. Ashaland Corporation, asserting that the doctrine of part performance under Section 53A of the Transfer of Property Act does not confer legal title on the purchaser. The court concluded that the assessee remained the legal owner on the relevant valuation dates, and the property's value was rightly included in the net wealth.

Issue 3: Ownership and Wealth-Tax Liability of Makarpura Palace
The Tribunal considered whether the assessee continued to be the legal owner of Makarpura Palace on the relevant valuation dates and if its market value should be included in the wealth-tax returns for the assessment years 1964-65, 1965-66, and 1966-67. The property was requisitioned by the Union Government, and an agreement to sell was reached. However, the sale deed was executed post the relevant valuation dates. The court concluded that the agreement for sale and possession did not transfer the legal title to the Union Government. The court held that the assessee remained the legal owner on the relevant valuation dates, and the property's value was rightly included in the net wealth.

Conclusion:
The court answered all questions in the affirmative, upholding the Tribunal's decisions. The assessee remained the legal owner of Jay Mahal Palace and Makarpura Palace on the relevant valuation dates, and their values were correctly included in the net wealth. The court rejected the assessee's oral application for a certificate of fitness for appeal to the Supreme Court, concluding that the case was not fit for such an appeal.