Supreme Court of India
Commissioner Of Wealth Tax, Calcutta vs Smt. Anjamli Khan on 6 November, 1990
Equivalent citations: 1991 AIR 2023, 1990 SCR SUPL. (2) 563, AIR 1991 SUPREME COURT 2023, 1991 AIR SCW 2254, 1991 TAX. L. R. 748, (1990) 4 JT 584 (SC), 1991 KERLJ(TAX) 77, (1991) 54 TAXMAN 198, 1991 (2) SCC(SUPP) 681, 1991 SCC (SUPP) 2 681, (1991) 187 ITR 345, (1990) 90 CURTAXREP 22
PETITIONER:
COMMISSIONER OF WEALTH TAX, CALCUTTA
Vs.
RESPONDENT:
SMT. ANJAMLI KHAN
DATE OF JUDGMENT06/11/1990
BENCH:
RANGNATHAN, S.
BENCH:
RANGNATHAN, S.
SINGH, K.N. (J)
CITATION:
1991 AIR 2023 1990 SCR Supl. (2) 563
1991 SCC Supl. (2) 681 JT 1990 (4) 584
1990 SCALE (2)934
ACT:
Wealth Tax Act, 1957: Section 2(e)--Compensation receiv-
able on acquisition of Estate--Whether 'asset' includible in
the net wealth.
West Bengal Estates Acquisition Act, 1953: Section 17(
1)--Compensation receivable on acquisition--Whether an
'asset' liable to Wealth Tax.
HEADNOTE:
The Respondent-assessee owned vast agricultural proper-
ties which came to be vested in the State Government by
virtue of the provisions of the West Bengal Estates Acquisi-
tion Act, 1953. The assessee was entitled to receive compen-
sation in respect of those lands. For the assessment years
1957-58, 1958-59 and 1959-60, the Wealth Tax Officer re-
quired the assessee to furnish particulars of the compensa-
tion due from the Government. The assessee was unable to
give the particulars, but stated that his agricultural
income from the lands used to be assessed at Rs.1,00,000 per
annum and that the taxes thereon amounted to Rs.20,000 per
annum. Taking the net agricultural income at Rs.80,000 and
applying the provisions of Section 17(1) of the Acquisition
Act the Wealth Tax Officer estimated the compensation pay-
able to the assessee at Rs.3,40,000. Deducting the interim
compensation received by the assessee, he estimated the
amount of compensation at Rs.3,25,000 for the assessment
year 1957-58 and at Rs.3,00,000 each for the assessment
years 1958-59 and 1959-60.
The assessee preferred appeals to the Appellate Assist-
ant Commissioner on the ground that the compensation receiv-
able was not an 'asset' under the Wealth Tax Act. The appeal
was dismissed. Aggrieved, the assessee appealed to the
Tribunal. The Tribunal allowed the appeals. On a request
from the Revenue, the Tribunal referred the question of
includibility of the estimated compensation amounts in the
net wealth of the assessee. The High Court answered the
question in favour of the assessee.
Against the said decision of the High Court the Revenue
has preferred these appeals claiming that the decision of
this Court in Pandit
564
Lakshmi Kant Jha v. CWT Bihar & Orissa, [1973] 90 ITR squar-
el3 governs the issue.
Allowing the appeals, this Court,
HELD: 1.1. The right to receive compensation in respect
of the lands acquired under the West Bengal Estates Acquisi-
tion Act, 1953 is an asset which should be included in the
net wealth of the assessee. There is no difference in prin-
ciple between the Bihar Land Reforms Act, 1950 and the West
Bengal Estates Acquisition Act, 1953. The High Court and the
Tribunal erred in holding that there was no asset the value
of which could be included in the net wealth of the assessee
by reference to the lands of the assessee which vested in
the State Government.
1.2. The reference to the High Court not only raised the
question whether there was any asset capable of inclusion in
the net wealth but also the question as to whether the sums
estimated by the Wealth Tax Officer on this account can be
included in the net wealth of the assessee as on the rele-
vant dates. Neither the Tribunal nor the High court have
touched upon this aspect in view of their conclusion that
there was no "asset" at all capable of inclusion in the
estate.
Pandit Lakshmi Kant Jha v. Commissioner of Wealth
Tax, Bihar & Orissa, [1973] 90 ITR 97; Mrs. Khorshed Sha-
poor Chenat v. Assistant Controller of Estate Duty, [1980]
122 ITR 21; Joginder Singh Ors. v. State of Punjab & Anr.,
[1985] 1 SCC 231; relied on.
Commissioner of Wealth Tax v.O.C. Mahatab, [1970] 78 ITR
214; referred to.
2. It would not be necessary to determine the question
whether the valuation of the said asset at the figures taken
by the wealth-tax officer is correct or not. This is a
question which will have to be considered and decided by the
Tribunal while disposing of the matter in conformity with
this judgment. The Wealth Tax Officer has included in the
net wealth the entire amount of the compensation that would
eventually become payable to the assessee without making any
allowance, as was done in Pandit Lakshmi Kant Jha's case,
for the circumstance that the compensation was payable at a
future date. It is clear that, where the compensation is to
be determined and is payable at a date much later then the
valuation date, the value of the assessee's right to receive
the compensation can only be the present value (i.e. the
565
value as on the valuation date) of the amount that may be
determined and paid as compensation in future. It cannot be
equal to the amount of compensation payable under the Act.
The present value of the future compensation will, there-
fore, have to be determined on a consideration of all rele-
vant aspects that may be put forward before the Tribunal.
Pandit Lakshmi Kant Jha v. Commissioner of Wealth lax,
Bihar & Orissa, [1973] 90 ITR 97, referred to.
3. In the instant case, the Tribunal ought to have held
that the value of the assessee's right to receive compensa-
tion under the provision of the West Bengal Estates Acquisi-
tion Act, as on the relevant valuation dates, had to be
included in the assessee's net wealth for the assessment
years 1957-58, 1958-59 and 1959-60. However, the amounts of
compensation determined by the Wealth Tax Officer cannot be
included in the net wealth; but only the value, as on the
relevant valuation dates, of the assessee's right to receive
compensation estimated in accordance with proper principles
can be included in the net wealth of the assessee. What such
estimated value should be will have to be decided by the
Tribunal after giving both the parties an opportunity to put
forward their respective contentions.
JUDGMENT:
