COMMISSIONER OF WEALTH TAX, BIHAR, PATNA.
“ y. tw . MAHARAJA KUMAR KAMAL SINGH | ‘February 20, 1984 oe nN
[ V.D. TULZAPURKAR, R.S. PATHAK an dSABYASACHI MUKHARIL, 33.1
-Wealth Tax Act, 1957, s.m)—Net wealthHow to compute net wealth . for . wealth tax assessmtent—First estimate value of assets as per s.1(1) and then deduct
' the debrs owed by assessee except debts excluded by s.2¢n).—Any factor detracting
* from value of asset which a willing purchaser would pay for. buying that asser in ope market must be, taken into account, Possibility of deduction of dues of assessee for agricultural income-tax fromamount of compensation under s.4(c) of Bihar Land
Reforms Act, 1950 isa factor to be taken into consideration in estimating the. value of
’ the right to coinpensation whiclt it would Fetch’ ifsold in opeh tnarket.” mos
\
+ Bihar Land Réforms Act, 1950s. 4 (c) —interpretation of. . . . . ? . . . . - While computing the net wealth of the - respondent—assessée for purposes: of wealth tax assessment under the Wealth Tax Act, 1957, the wealth tax’ officer inchided certain amount as the value of the assessee’s right to compensation which was contested by.-the assessee on the ground’ that after adjusting his outstanding~ agricultural income tax liability the compensation payable té him was nil. The —
. assessee also produced Collector’s letter, to show that the amount of compensation receivable by the assessee would be nil. The Appeallate Assistant Commissioner agreed ‘with the view of the Wealth Tax Officer. In appeal before the Tribunal the assesses ‘contended that the unpaid agricultural income-tax as a debt was deductible while computing his net wealth. The Tribunal accepting the Revenue’s contention hetd that the amounts claimed by thie assessee were not deductible as a debt-under '$.2(m) as -the arrears of agricultural inconie- -1ax were outstanding for more than twelve months. On a reference being made, a Full Bench of the High. Court was of the. opinion that the market value of the right of the assessee to receive ad-interim | compensation should be determined in view of the provisions of 's.4(c) of the Bihar
_ Land Reforms Act, 1950 and held that in the facts and. circumstances of the case as.
nothing was receivable by the assessee from the State of Bihar in view .of the arrears of agricultural income-tax, the value‘of the asset to the assessee was nil,
- had accrued to him on vesting of his estate in the State of Bihar under the Bihar — Land Reforms Act, 1950 on the basis of market value on the valuation date. This - ro re. ee)
Hence this; appeal. * ,*
; pay for buying that asset in, pen market. [643 BC} o
@W.T..V. M.K. KAMAL SINGH oS 635.
. Dismissing the appeal, , : 1* * : ‘ . “ i. : %
N - ” ™ . - there are two different steps. The first and essential step would be to estimate the value of the assets in accordance with the provisions of the Act and the second step would be-to dedtict therefrom the debts owed-by the assessee except: ‘the debts ex
HELD: For computing net wealth under s.2(m) of the Wealth Tax Act, 1997 - cluded by that’section. For: estimating the value of the assets the material provision would be s.7(1) of the Act which‘ enjoins the Wealth Tax Officer to estimate the price which, in‘ Kis opinion, an asset other than cash would- fetch if sold in the open market on the valuation ‘date. The ‘Wealth Tax Officer must take into account any 7 factor ‘which detracts from the value of an asset which a willing purchaser would
“Section 4 of the Bihar Land Reforins Act, 1950 deals with. the consequénces of the vesting of-av estate or tenure in the State and stipulates different consequences. Clause (c) of s.4 provides that the arrears of revenue and cesses remaining lawfully due in respect of the estate or tenure shall continue to be recoverable in spite of’the — vesting of the estafe and shall without prejudice to any other mode of recovery, be recoverable, when so ordered by the Collector, by the deduction thereof from the amount payable. Tee § GH] as
*,.
In the instant case; the possibility of deduction of the dues of the assessee’ for
_ agricultural'i income tax under s.4(c) of the Bihar Land Reforms Act from the com-, pensation money is a factor that affects price or value of thé compensation money receivable by the assessee under the Bihar Land Reforms Act and unti! it has been finally ‘determined that no’ arrears of agricultural income tax js payable at all, will remain a hindrance and the value of which must’ be quantified and déducted’ before -a p oper estimate of the value of the asset money receivable by the assessee is prepa- ‘red. Except i in cases where the duestion of arrears of agricultural income tax is sttled, ‘ this is a factor which goes to the dimination of the value of the asset. To. what extent ‘that would - affect the value of the asset is -a2 “matter of quantification. The court ‘is not concerned ‘with - the question of . actual quantification.. The
Court, is concerned with’ the question’ whether ‘that factor i ds a matter which - has to: Be taken info’ consideration in estimating the value of the asset in question.
- The court is of the opinion that it is a factor certainly to'be taken into ‘consideration in estimating what i it would fetch in the pen “market” [644 H; 645 A-C] ° - ef oy
. > . 8 : : . . oa 4 a
The’ coritention that a debt which is not deductible’ ‘because of ‘provisions ol; s.2(m) should not be taken into consideration i in estimating the value of an asset is not acceptable i in the facts and circumstances of this case. [645 F]) f ee - . \ ; .
Civit APPELLATE. Funtsoretion : : Civil ‘Appeal Nos. 1238 to 1240 of 1973. -" ° .
ry
~ ao *
636 © . SUPREME courT REPORTS [1984] 2 S.0.R.
“From the “Judgment and Order dated the 17th September, 1971 of the Patna High Court in Tax Cases Nos, 2 of 1965 and 19 and 20. of (1966. ;
7 . z t
, BB. Ahuja & Ms. A. Subhashini, for the Appellant.
Dr.Y.S. Chitale, and U.P. Singh, for Respondent.
* «
. “ « . The Judgment of the Court was deliveréd by
; " SABYASACHT MUKHARN, F. ‘These apptals by certificates arise . against 4 decision of the Full Bench of the Patna High Court. Several.
questions were referred to the High.Court of Patna under Section 27 ¢ (1)
- of the Wealth Tax, Act, 1957, hereinafter referred to as ‘the Act. Two of these questions have been answered against the assessee, one was held to be not. entertainable and on misconceived. The question .
. answered against the revenue in that reference before the High Court was question’ No. (iii) mentioned. in the judgment of B.D. Singh. J.
and the question is as follows :— ,
-. “Whether, on the facts and circumstances of the case, the Tribunal was right in including in the assess’s net wealth.
a positive figure, on account of Zamindary compensation witout taking into consideration the arrears of dgricultural | income tax instead of taking the figure of compensation receivable from Government of: Bihar at nil”. . . é
Tn order, to appreciate the question, it may be nc€ssary to refer to some facts. The question involved before the Full Bench was for
"the assessment years 1959-60, 1960-61, and 1961-62, corresponding . valuation dates of which were the 3Ist October, 1958, 3rd October, ‘1959 and 31st Octobér,.19603 The assessee is an individual. His estate vested in the State of Bihar under the Bihar Land Reforms Act, 1950 on and from’ Ist July, 1952, and he is entitled-to recieve ~compé€nsation » under the Act from the government, Under Section 3 of the. Act, the - “question arose about the inclusion in the, ass¢ssee’s “‘net wealth” the value of the estimated amount of compensation receivable by him a ©, WT. v. M.K. KAMAL SINGH (Mukharit J. y. 637. . * . . ~ \ . ; . ., ~ ~ from the Bihar Government ander the Bihar Land Reforms Act, 1950. A
Tn ‘the assessment year 1959-60, the Wealth-tax Officer estimated the value at» Rs. 10,25,123 and : included it in the net wealth of ‘the x, assessee. For the assessment years 1960-61° and 1961-62, the assessee io produced a {etter from the District Collector; Arrah, to show that the , _assessee is entitled: to compensation of Rs. 4,39,713 only. The 4 Wealth-tax Officer estimated 75% thereof as the market value of the. B a right ‘of the assessee’to receive the compensation. -Accotdingly he ia included in the assessee’s net wealth -Rs. 3,29,784.° On appeal, the - Appellate Assistant Commissioncr ‘reduced the valuation for the. Ist year to Rs. 3,29; 784. For the next two _years, nately, 1960-61 and =. 1961-62, the Appeliate Assistant Commissioner held that it would - “be reasonable to estimate the market, value of the compensation to €: > be’ received by the Assessee atv65°% of the face value. The ass¢ssee preferred appeals before the Appellate: Tribunal regarding assessments for the aforesaid three years and reiterated his 2
7. contention that the* Tight to réctive. compensation. under'the Land D Reforms Act was not an asset within the meaning. of Section 2.(m) of the Act and could not be included im the assessee’s net wealth. The or “Tribunal held that the estimated amount of *zamindari compensation - payable to the assessee ‘was an‘asset:and hadto, be ivcluded in the assessee’s net wealth. However, it directed the Wealth-tax Officer to -, sestimate the value and compensation to be received by the assessee at - E 65% even for the [st year, i.e 1959-60, as wis done bythe Appellate - Assistant Commissioner with regard to. the second and third years i,e. *, 1960-61 and 1961-62. . an oo of ned wo + The cdntention-of the asessee further was “that the unpa aid ericul- oF ~ _ tural income-tax as.a.debt was deductibe while computing: his net . wealth, . His claim was that this debt was Rs. 5,10,831 in’ the ; first year, , Rs. 4,76,46].00' in the second year and. Rs. 4,75,706 in the third year. A sum of ‘Rs.* 24.430 being agricultural income-tax demand for 1363 fasli was allowed to be déducted by the Wealth-tax: . Officét’ for ‘the second and third yéars? arrears of agricultural income- G -. tax, the assessee had. produced Government letter to show that the, - amount of compensation receivable by the assessce would be nil. Accor-' ding to the enquiries from the revenue department, ‘it also appeared - ‘that the final compensation money payable in respect of the assessee’s .zamindari was less’ than the agricultural ittcom®tax dues outstanding - H: aganist him, andso it was not possible to effect realisation of the dues
* o _ = 2.
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638 =. + SUPREME COURT'REPORTS L984) 2 SOR] _ of agricaitural income-tax only by adjustment from the final compen- . sation money. The Tribunal, therefore, held that except Rs. 24,430 which was agricultural income-tax demand for 1363 fasli and .which , ' was allowed to be deducted by the Wealth-tax Officer, the other amounts as claimed by the ‘assessee were not deductible as the arrears were
, outstanding for more than 12 months, in view of the provisions contained under Section 2 (m)of the Act and the Government Jetter was not at all helpful to the assessee. Then reference was-‘made to the High
Court under Section 27(1),of the Ket raising five questions out of which , .
question No. _ ait as set out hereinbefore is befare us. ‘t : :
The questions before the High Court inchiding* the question which is before us were referred toa Full Bench of the Court and the reference was disposed of by the ‘Full Bench of Patna High Court on 17th September, 1971, and the decision is reported in 84 L-T.R. p. 240.
- The Ful Bench decided. the question in issue before us against the revenue and in favour of the assessee holding. thereby that in the facts and citcumstances of the case as nothing was receivable by the assessee-in view of the grrears of agricultural: income-tax, the value of the asset to, the assessee, was nil. oy ; co
, & i
Though ‘at one point of time there was certain controversy as”
. L to whether the right to receive compensation on the vesting of the
F°
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’ estate of the appellant in the: Government was an ‘asset ' and as such ‘its value had to be taken in computing the net value of assets or not,. . There is no doubt. that it is and it was not urged before us that it is not an asset. The only question, is, how should it be valued. Jt was con- tended before us that the Act prohibits setting off of deductions of
_debts which are outstanding for more than.12 months on account of °
* the arrears of tax’ on income, agricultural or otherwise: - Therefore it was urged that if the arrears of agricultural income-tax. due as in this case: are tiken into account against the vaJue of the. compensation receivable by . the assessee, then it would not be in accordance with the scheme of thé Act and it would permit defeating the intention of the legislature, namely, permitting deduction of arrears of agricultural income-tax ‘outstanding for more than 12 months by indirect method which is prohibited directly in terms-of Section 2 (m) (iii) of the Act, This.is the question for our consideration in these appeals.
oc ee i m
¢ * ~ . . . ‘C.W.T. ¥. | M-K. KAMAL SINGH (Mukharji J). .639 a ‘Wwe may at a glance examine the provisions “of ‘the Bihar Land
Reforms Act, under which compensation was payable -to the assessee
‘and the’ value of which was under consideration i in this case, Before :
| wedo that, it is necessary to note the relevant provisions of the Wealth:
Tax Act and to find out the scheme under the Wealth Tax Actas to. how the asséts have to be valued, Section 3 of the said Act is the charg-
‘ing section which i imposes a tax for every assessment year in respect of. - -. * — the net wealth on the corresponding valuation date. Section 4 makes.» he some deeming inclusion of certain assets as assets-of the assessee. It is: - ‘not necessary to deal ,with these in detail but it may be mentioned. that - wf certain assets ‘which are not standing’ in the name of thé assessee aro ‘“ineluded in the net wealth, for example; assets ‘transferred to spouse
-or minor child or-partner of a firm ete, These deal with the assets whith are not in the name or standing in- the name.of assessee but which
Ly
We may note liere as-it. was convassed. before us that under sub-section (3) of Section 4 of the Act which provides that where the value of any asset is to. be included. in the net wealth of an assessee in accordance °
" with clause (ay of sub- section (1) or sub-section (1A), “there shall be
‘deduced from such value any debts owing on ‘the: valuation date by the transferree mentioned in that clause in so far ag such debts are ~ referable to’ such assets; and the provisions of. Section 5 shall apply wy * in‘reldtion to such. assets as if such assets were assets belonging to the f assessee. Section 5 deals’ with the exemption of certain’ ‘assets. ‘Section 6 excludes certain: -dss2ts and debts outside’ India!. Section is important’ which ‘provides the method -how the ,is to be ‘assessed. It ‘provides that it shall be estimated to be. the- price -which i in the opinion of the Wealth-tax Officer it would fetch if sold in the open market on the valuation date. Section 2 (m) deals: with - “net wealth’ upon which tax is levied and reads as follows :
“#2. (m)—"n net wealth” means ‘the amount by which, the
\ aggregate value” computed i in accordance with the provisions of:
this .Act of all the assets, wherever located, belonging, to the
,assessee'on the valuation date, including assets required to be included in his net wealth as.on that date under this Act, is im:
ey + excess.of the aggregate value of all the debts owed by the aaseasce on the valuation date other than—" “ mw f. debts which -under section 6 are not t te be taken into account; ne
_really belong to the assessee according to the scheme. of the legislation. -
- 640 SUPREME COURT REPORTS [1984]. 2 Sc. .
(ii) debts-which are sécured on 6r which have been incurred in Telation to, any property in respect of which wealth-tax is not chargeable under this Act; and
N ‘ '
- (iii) the amount of the tax, penalty or interest apayable incon- sequence of any order passed under or in pursuance of this
Act or any law relating to taxation of income or profits, . or the Estate Duty Act, 1953 (34 of 1953), the Experiditure Tax Act, 1957 (29 of 1957), or the Gift-tax Act, 1958 (18 of
~ — 1958),— - x ‘
‘ (a) which is outstanding on the valuation date and. is clai-
¢ ° med by the assessee in appeal, revision or other proceed-.
ing as not being payable by him; or =,
(b) which, although not claimed by the assessee as not being payable by ‘him, is névertheless ,outnding for a period of more than twelye months on the valuation - date”, "
The main contention of the revenue is that the amount of tax,
Penalty or interest payable in consequence of any order passed under or in pursuance of the Act or any Jaw relating to. taxation of income or profits, or the Estate Duty Act. which‘ is outstanding on the valuation
- date and is claimed by the assessee in appeal, revision or other proceedings as not being payable by him and which, although not claimed by’
the assessee as not being payable by him, is neVertheless outstanding for more than twelve months on the valuation date should not be - considered to be debt entitled to be deducted from net wealth. “Net vealth’ as we have noticed means the amount by which the ‘aggregate ~value computed in accordance with the provisions of the, Act, of all "the assets wherever located, belonging to the assessee is in excess of the aggregate value of all debts excluding the debts mentioned in Section 2 (m) of the Act. Therefore the scheme of. imposition of wealth tax in: case of an assessee which is not a company and the present assessee is nota company ahd the computation of the’ wealth tax of an assessee which is a company might be done under sub-section (2) of Section 7 .
of the Act, must be -done by first estimating the value of the assets in in accordance with the provisions ofthe Act. That is the first ‘step. ‘Therefore the estimation of the value of the assets is first necessary
2-7 i eo ee
NO
. “
Hy
¢
“ ‘C.W.T:'V, MK. KAMAL SINGH (Mukharji, J) >. 641°
“ in accordance wiih the provisions of the” Act. The material provision - of the Act forthis varpose in the said Act ‘would be Section’ 7 (1) which enjoins hc. Wea'th-tax Officer” im. case of an asset other than cash?to
> estimate the price which, in his opinion, it would fetch if, sold in- the, .
open market on tne valuation date. ‘Therefore the first step in the facts |
_and circumstances of this case was that the Wealth-tax Officer to esti mate the price .which in his opinion the right to compensation of the assessee would fetch if sold in’ the open market, ahd-after determining the value in the manner aforesaid to deduct therefrom debts owed by °
> the assessee excluding however the debts which are mentioned i in clause | a @, (ii) and Gi) © of Section 2 (m) of | the Act. 7 ;
’
oy uty
S
. q ~ Keeping, this scheme of, the Act.in mind, we have to examine the nature _of compensation under Bihar Land Reforms Act, 1950..
_ Section 3 provides for the notification vesting an estate of tenure in “" * the State and fromthe date specified -in the notification, the estates or tenures of a proprietor or tenureholder, “specified, in the notification, will pass on to and become vested in the State. Iti is not’ disputed, that ‘in’ this case this has happened in respect ofsthe’ property in- question. . Section’ 4 deals with the consequences of the vesting of an estate or tenure in the State and stipulates different consequerttes. We are not really concerned with.all the various consequences. We may, ‘however, mention clause (c) of Section 4 which is important for our present purpose. It provides as it indicates that the arrears of revenue and © wu, DESSCS remaining lawfully ‘due in respect of the estate or tenure shall
~ continue to bé recoverable from him in spite oft the vesting of the estate’
and “shall without, prejudice to any other ‘modg of recovery, be recoverable: (emphasis supplied),..when'so ordered by: the Collector, ’
_by the deduction thereof: from the amount payable to such intermediary under Section 32, Section 32A or Section 33”, Reference was made to Section, 14 which -deals with, provisions relating to certaindebts of proprietors and, tenure-holders. “Sections 19, 23 and: 24 were also referred to which we do not think are material for our present’ purpose. Section 26 onwards deal with the publication of. Compensation Assessment-rdll. Section 32 provides for the manner of pay- ‘ment of compensation. ‘Section 32A provides as follows :— oe ne \
. é “32A—Where the Compensation Officer considers’ that delay is likely to occur in. payment of compensation under section
32, he may, subject to the provisions of section 32B, payin the manner, 26 far as: may. be applicable, provided in section 32; > toe aN
“4
">
~ SUPREME COURT. REPORTS _. * [1984] 2 s.cr.
. . . ; ‘ . f _ to the person entitled thereto under this Act a sum not exceeding fifty per centum of the approximate amount of compensation payable in him under eetion 32 calculated i in the manger ‘prescribed in this behalf, ‘
Provided that, if subsequently it is forind’by the Compensation Officer or the Collector that any amount has been paid to aly person in excess of the amount payable to him uncer s€ction
32 or that the person to whom the aomount has been paid was’
not entitled to it under this Act. the amount so paid shall, afier “Sy giving the person concerned a reasonable opportunity of being.
heard, be recoverable from him together with interest at & per - centum per annum as if it were a public demand”.
" Section 40 is also.important and is as follows— -°\ ¢-
. Any estate or tenure of such intermediary as the Collector; Claims’ Officer or the Compensation’ Officer may, from time to time - . require for any of the purposes ‘of this Act or for giving effect
“*40--(1) The Collector, the Claims Officer or the Com- pensation Officer may,-at any time either before or after the date - of vesting, by a written order. served in the presecribéd manner,
‘require any intermediary or any other,person in possession of an estate or tenure or any part thereof or any agents or employees of such i ntermediary or other p¢rson, as the-case may be, to pro-
‘duce, ata time and place specified in the order, such documents, - or.to furnish an affidavit otherwise such information relating to to any provision therof.
’ t
(2) Where - any “intermediary of ‘other " person, referred to in ‘sub-section (1), if so required by-a written order.
of the Collector, fails without sufficient cause, to produce such docments, or to furnish such information at’ such time and plac
"as may be specifjed in the order, such intermediary or othér person, as the case may be, ‘shall be liable to.a,penalty which may/extend to fifty rupees for every day after the expiration of such time un- til such documents have been produced or such information has — been furnished and such penalty’ shall be realised as a public
, demand:
vi
- vy OW.TLY. MK. KAMAL SINGH (Mukharji, J.) S643 oo "Provided that where the sum ‘of such’ penalty exceeds A eet os five hundred rupees, the Collector shall ‘refer the matter to the ae
Commissioner ‘whose orders thereon shall be final:
. Py . . -
_” , Provided further, that the Commissioner may at any time,
"Of his own. motion or on the application of any intermediary, “ZB.
~ revise any order of the Collector imposing any: pena and the order of the Commissioner, on revision shail be final”.
‘ oe aA
\ . — a Section 33 which ptovides for making ad interim: payments to ” OO 1 proprietors, sub- section @) of. which contains the following ~C * proviso :- . . oe . “Provided that the ‘Collector shall ‘have the power. to « \ sO refuse, suspend or stop any such ad interim, payment in the case +
_of any proprietor or tenure-holder who in his opinion has failed’ a ger neglected to comply. with any order under section 40". D
The Patna High’ Court was of the opinion that in view. of the : facts and specially. the letter given by the Collector, the market value of the right.of the assessge to receive! ad, interim compensation’ " "should be determined in veiw,of the provisions of Section 4(c) of. Ke “Bihar, Land Reforms Act, 1950, and. keeping in -view' the correspon .. — dence passing between the collector and the’ assessee. It is true, that the “taxing authority has adopted 65°% of the face value of the amount “+ discounting the rest of account of delayed ‘payment. Jt may be men- © tioned that these compensatidns were payable. in 40 years. That is a . factor ‘which has to be’ taken into account and discounted but the - F Ne ‘other vital factor affecting the value. -of the asset namely, the liability. . aid the obligation to have the amount deducted under Section 4 (c) .of the Bihar Land Reforms Act has not ‘been taken into account at, all..In case where bonds have’ been issued after taking into considera= ..
Saw 7 ON
‘tion the Jiability under Section 4 (c) of ‘the Bihar Land Reforms Act © * . ° -* Jor where- liability under Section 4 (c) has been determined and dedu-. « G_ - ted from’ the compensatton, in-such a case no question of deduction” ~ . ™
_. ,on account of the arrears of agricultural income-tax mentioned in ~~ Mey Section 4 (c) of the, Bihar Land Reforms Act would. arise but in all’ other cases, thisis a liability, a hazard, a factor,.a clog of a jeopardy which detracts from. the. value. of the‘asset and in estimating’ © the value which, ,one has todo on the basis which | a. willing purchaser ed
+
. 644 SUPREME COURT REPORTS ~ [1984] 2 SCR
~ would. pay for buying the said asset in” open market, the Wealth-tax Officer must take that factor into account, otherwise it would be an . unreal estimate. This chance and hazard must influence all buyers.
¢
_ There are two different stages. One is estimation of the value of the assets and the other deduction theréfrom the debts owed by the assessce, In Jast mentioned stagé, surely in view of the provisions’ of Section 2 (m) , the debt in respect of income-tax which is outstanding for more than 12 months cannot be deducted. But i in estimating the
* value of the assets, this possibility, which is indeed i in the nature of an obligation of the Compensation Officer, is a hazard,. a clog or a hindrance whichif a proper estimate is made under* Section 7 (1) by the ne
Wealth-fax Officer, he has to take into consideration. It is nota que-.
stion of deducting the-debt ‘but a question of estimation of the value:
of the asset in question. > By 5 th & Learned counsel ‘tor the assessee drew our attention to the ¥ci- sion of this Court in the case of Standard Mills Co. .Ltd. v. Commisstoner of Wealth- -tax, Bombay and to Bench decision of the Bombay
' High Court in the case of Commissioner of Wealth-tax Bombay City II v. Purshottam N.*Amersey and Another. These decisions, in our opnion, are not relevant at all.. Reliance was also placed on a décison of this Court in the cast.of Pandit Lakshmi Kant Jha v. Commissioner of Wealth-tax , Bihar and Orissa. This question was not in issue but — it was reiterated that under the Bihar Land Reforms Act, 1950 as soon | as the estate ora tenure of a proprietor or tenure holder vested in the
State, he became entitled ‘to receive compensation. The ri ‘ight. to receive ©
OO (1) 63 LT.R. p. 470.
compensation from the State was a valuable right. The fact that compensation was not payable immediately and its payment might be spread over a period of 40 years would be relevant only for the purpose | x ’
of evaluating his right of compensation. The right to receive compen- constituted an asset for the purpose of Wealth Tax Act.
‘ ‘
* We are clearly of the opinion that the possibility of deduction of the dues of the assessee for agricultural income tax under Section
— QULIR p. 190, Ste (3) 90 LT.R§ p. 97, sation even though the date of payment is deferred is property and
é ene od
. we ' ed
C.W.T ¥. M.K. KAMAL SINGH (Mukharji, Jy ~ 645, 4(c) of the pihar Land Reforms Act from thé compensation money isa factor that affects*price or value of the compensation money recei-': _vable by the assessee under ghe Bihar Land Reforms Act and until it has been finally determined that no arrears of agricultural income tax is payable at all; will remain a hindrance and the value’ of which must’ be quantified and deducted before a proper estimate of the value of the asset money receivable by the’ agsessee is prepared, Except i in cases where. the question of arrears of: agricultural - income tax is settled, this is a factor which goes to the diminution of the-value. of the asset.”
To what extent that: would affect the value of the asset is a “matter of | quantification, We are not concerned with that question of actual: -. quantification. We are concerned with the. question whether that factor is a matter which has to be taken into consideration in estimating the value of the asset in question. We are of the opinion that it is‘a
' factor certainly td be taken into consideration in estimating what it would, fetch in the open markét. ft is not a case as was contended. on behalf of the revenue, ‘that this was permitting indirectly deduction of debt which was prohibited by the legislation. Section 7 and 2 (m) of ‘the Act though must be read harmoniously apply to two different’ stages, Section 7 is the estimation, of the market value of the asset,
' section 2 (m) enjoins that from the same the debt owed by the assessee’
to be deducted, Such: debt owed'would be computed in accordance with Section 2 (m) but the estimation of the value-of asset is ‘on the basis which such asset would fetch in the.open market taking einefo
’ sideration, the view point of a willing, purchaser.
We must mention that our attention was drawn to.< certain other “provisions of the Income- tax Act and also Wealth’ Tax Act and it was
- contended that any debt which is excluded under the provisions of -
‘Wealth Tax Act cannot be deducted and on the same principle a debt which is not deductible. -because ‘of provision of ‘Section 2-(m) , should not be takeninto “consideration in estimating the valuc. of an _asset, We are unable to accept this position i in the facts and circumstan-
"cts of this case.
“Our attention ° was $s drayh to ‘certain. other. rules namely, © “€
Rule 34 ofthe Bihar Land Reforms Rules, 1951. We do’ not think it: "is. ‘material to discuss ahese ules any further,
- | In the view weé have taken, we. are of the pinion that the Full ~ Bench of the Patna. High Court was right in its conclusion. The appeals : therefore fail and are accordingly dismissed with costs; .
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HSK. | . 7 co * soe ° dismissed..
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