NAGAKUMAR C N Vs. COMMISSIONER OF WEALTH TAX

JUDGEMENT

(1.) THE question referred under the provisions of the Wealth-tax Act, 1957, reads thus :

(2.) THE assessee was the owner of agricultural lands; there is no dispute that he lost his lands under the provisions of the Karnataka Land Reforms Act, 1961, and they vested in the State Government. But the compensation receivable by the assessee was not yet determined at the time of assessment. THE amount was estimated as Rs. 1,19,000 and, after giving the deduction, its value was determined for the purpose of the Wealth-tax Act (for the assessment years 1976-77 to 1978-79), in the light of a circular issued by the Central Board of Direct Taxes dated May 15, 1964. THEre is also no dispute as to the mode of valuation in this case. THE assessee contends that, since compensation is not an "asset" at all falling within the taxable subject under the Wealth-tax Act.

(3.) CWT v. Maharaj Kumar Kamal Singh [1984] 146 ITR 202, is a decision of the Supreme Court. There was no dispute therein that the right to receive compensation on the vesting of the estate in the Government was an "asset" and as such its value had to be taken in computing the net value of the assets. The Supreme Court says that "there is no doubt that it is..." thereby affirming that it is an asset. The only question was the mode of valuing the asset and it was held that possibility of deduction of the dues of the assessee for agricultural income-tax from the compensation money will have to be considered as a hindrance and its estimated value should be deducted and, similarly, the fact that compensation was payable in 40 years is a factor which has to be taken into account and the fact value of compensation bonds has to be discounted.