Section 17. Valuation of life interest

17. Valuation of life interest.— (1) For the purposes of sub-section (1) of section 7, the value of the life interest of an assessee shall be arrived at by multiplying the average annual income that accrued to the assessee from the life interest by the fraction 1 minus 1, where 'P' represents the annual premium p + d for a whole life insurance without profits on the life of the life tenant for unit sum assured as specified in the Appendix to these rules, and 'd' is equal to i "i" being the rate of interest. 1+i Explanation. —In this rule,— (a) "life tenant" means a person for the duration of whose life the life interest is to subsist; (b) "average annual income" means the average of the gross income derived by the assessee from the life interest during each year of the period ending on the valuation date, reduced by the average of the expenses incurred on the collection of such income in each of those years: Provided that the amount of the reduction for such expenses shall, in no case, exceed five per cent of the average of the annual gross income: Provided further that in case the income so derived is for a period exceeding three years, only that income derived during the three years ending on the valuation date shall be taken into account; (c) the rate of interest shall be 6½ per cent. per annum. (2) Notwithstanding anything contained in sub-rule (1),— (a) the Assessing Officer may, if he is of the opinion that in the case of the life tenant, a life insurance company would not take the risk of insuring his life at the normal premium rates in force but would demand a higher premium, vary the valuation suitably; (b) the value of the life interest so determined shall, in no case, exceed the value as on the valuation date as determined under this Schedule, of the corpus of the trust from which the life interest is derived. PART G JEWELLERY Explanation .—Production before the Assessing Officer of account books or other evidence from which material evidence could with due diligence have been discovered by the Assessing Officer will not necessarily amount to disclosure within the meaning of the foregoing proviso. 1. Subs. by Act 4 of 1988, s. 127, for "Wealth-tax Officer" (w.e.f. 1-4-1988). 2. Subs. by s. 139, ibid ., for sub-section (1) (w.e.f. 1-4-1989). Earlier it was amended by Act 46 of 1964, s. 17 (w.e.f. 1-4-1965). 3. Subs. by Act 3 of 1989, s. 66, for ", for reasons to be recorded by him in writing, is of the opinion" (w.e.f. 1-4-1989). 4. The words "not being less than thirty days," omitted by Act 32 of 2003, s. 100 (w.r.e.f. 1-4-1989). 5. Ins. by Act 3 of 1989, s. 66 (w.e.f. 1-4-1989). 6. Ins. by Act 23 of 2012, s. 116 (w.r.e.f. 1-7-2012). 7. Ins. by Act 18 of 2008, s. 60 (w.e.f. 1-4-2008). (1A) No notice under sub-section (1) shall be issued for the relevant assessment year,— 1 [(a) if four years have elapsed from the end of the relevant assessment year, unless the case falls under clause (b)[2] [or clause (c)]; (b) if four years, but not more than six years, have elapsed from the end of the relevant assessment year unless the net wealth chargeable to tax which has escaped assessment amounts to or is likely to amount to rupees ten lakhs or more for that year;] 2 [(c) if four years, but not more than sixteen years, have elapsed from the end of the relevant assessment year unless the net wealth in relation to any asset (including financial interest in any entity) located outside India, chargeable to tax, has escaped assessment for any assessment year.] 3[ Explanation 1 ].—For the purposes of sub-section (1) and sub-section (1A), the following shall also be deemed to be cases where net wealth chargeable to tax has escaped assessment, namely:— (a) where no return of net wealth has been furnished by the assessee although his net wealth or the net wealth of any other person in respect of which he is assessable under this Act on the valuation date exceeded the maximum amount which is not chargeable to wealth-tax; (b) where a return of net wealth has been furnished by the assessee but no assessment has been made and it is noticed by the Assessing Officer that the assessee has understated the net wealth or has claimed excessive exemption or deduction in the return; 2 [(c) where a person is found to have any asset (including financial interest in any entity) located outside India.] 2[ Explanation 2. —For the removal of doubts, it is hereby clarified that the provisions of this section, as amended by the Finance Act, 2012, shall also be applicable for any assessment year beginning on or before the 1st day of April, 2012 (23 of 2012).] (1B) (a) In a case where an assessment under sub-section (3) of section 16 or sub-section (1) of this section has been made for the relevant assessment year, no notice shall be issued under sub-section (1)[4] [by an Assessing Officer, who is below the rank of[5] [Assistant Commissioner or Deputy Commissioner], unless the[6] [Joint Commissioner] is satisfied, on the reasons recorded by such Assessing Officer, that it is a fit case for the issue of such notice]: Provided that, after the expiry of four years from the end of the relevant assessment year, no such notice shall be issued unless the Chief Commissioner or Commissioner is satisfied, on the reasons recorded by the Assessing Officer aforesaid, that it is a fit case for the issue of such notice. (b) In a case other than a case falling under clause (a), no notice shall be issued under sub-section (1) by an Assessing Officer, who is below the rank of[6] [Joint Commissioner], after the expiry of four years from the end of the relevant assessment year, unless the[6] [Joint Commissioner] is satisfied, on the reasons recorded by such Assessing Officer, that it is a fit case for the issue of such notice.] 7[ Explanation.— For the removal of doubts, it is hereby declared that the Joint Commissioner, the Commissioner or the Chief Commissioner, as the case may be, being satisfied on the reasons recorded by the Assessing Officer about fitness of a case for the issue of notice, need not issue such notice himself.] 1. Subs. by Act 14 of 2001, s. 96, for clauses (a) and (b) (w.e.f. 1-6-2001). 2. Ins. by Act 23 of 2012, s. 116 (w.e.f. 1-7-2012).