Ajit K.Sengupta, J. - (1.) In this reference under Section 27(1) of the Wealth-tax Act, 1957, for the assessment year 1976-77, the following question of law has been referred to this court : "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the Commissioner of Wealth-tax was wrong in invoking the provisions of Section 25(2) of the Wealth-tax Act, 1957, inasmuch as the Wealth-tax Officer had not committed any error in excluding the value of the immovable property from the net wealth of the assessee because the ownership of the said property was not transferred by the vendor to the assessee by execution and registration of a deed of sale ?" Shortly stated, the facts are that the assessee owned one-third share of a flat at 127, Jolly Maker Chamber No. 11, Bombay, from which she earned rental income of Rs. 2,000 per month. She paid Rs. 50,686 in November, 1975, for acquiring the said flat. While making assessment, the Wealth-tax Officer included the said amount in the net wealth of the assessee on the ground that no execution or registration of conveyance was made in respect of the flat transferred.
(2.) On a perusal of the assessment record, the Commissioner of Wealth-tax found that the assessment so made was erroneous and prejudicial to the interests of the Revenue. He held that the value of the said flat should be determined on rental basis by allowance of outgoings. He, therefore, initiated proceedings under Section 25(2) of the Wealth-tax Act, 1957, and determined the value of the said flat at Rs. 1,40,600.
(3.) Aggrieved, the assessee came in appeal before the Tribunal against the said order of the Commissioner of Wealth-tax. It was contended that the Commissioner of Wealth-tax was not justified in invoking the provisions of Section 25(2) of the Wealth-tax Act inasmuch as the Wealth-tax Officer had not committed any error in determining the value of the assessee's interest in the flat in question. It was submitted that, since the immovable asset in question was not transferred to the assessee by execution and registration of a deed, the ownership of the property was not transferred to the assessee. It was urged that, although the assessee was in possession of the immovable asset, she was not the owner of the property in question. The Tribunal allowed the assessee's appeal.;