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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

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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

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forward their respective contentions.

JUDGMENT: