COMMISSIONER OF WEALTH TAX Vs. HARI SHANKAR RASTOGI

JUDGEMENT

(1.) THESE eight reference applications involve identical questions and, therefore, we dispose of the same with this common judgment. Accepting the prayer for reference under S. 27(1) of the WT Act, 1957 (in short 'the Act'), Income tax Appellate Tribunal, Delhi Bench C (in short the Tribunal), has referred the following question for opinion of this Court:

(2.) FACTUAL position is almost undisputed and is as follows :

(3.) THE two issues involved are essentially as follows : (i) Whether the right to compensation was an asset and (iii) whether the Tribunal was correct in holding that as and when compensation is received the same would be assessable in the hands of the recipient. So far as the first issue is concened, similar question came up for examination of the apex Court in CWT vs. Smt. Anjamli Khan (1990) 90 CTR (SC) 22 : (1991) 187 ITR 345 (SC) : TC 64R.155. It was observed in the said case that right to receive compensation does not cease to be an asset includible in the net wealth for the purpose of wealth tax merely because the compensation rolls contemplated by the concerned Act had not been published or the amount of compensation determined. By the mere fact that quantification of compensation or its payment is deferred, the right to receive compensation does not cease to be an asset includible for the purpose of wealth tax. Therefore, Tribunal was not justified in holding that right of appeal in the relevant set of facts would not constitute an asset includible in the wealth of the assessee. View expressed in the aforesaid case was again followed by the apex Court in CWT vs. U.C. Mehatab (1998) 149 CTR (SC) 290 : (1998) 231 ITR 501 (SC) : TC S64.4562. It was held that the value of assessee's right to receive compensation can only be the present value, i.e. the 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 Acquisition Act. The present value of the future compensation has, therefore, have to be determined on a consideration of all relevant aspects that may be put forward before the competent authority.