COMMISSIONER OF WEALTH TAX Vs. P N SIKAND

JUDGEMENT

(1.) The following question of law arising out of the order of the Appellate Tribunal has been referred under section 27(1) of the Wealth-tax Act, 1957, to this court for its opinion :

(2.) The valuation date relevant for the assessment year 1968-69 is December 31, 1967. We are required to determine, in reality, if the assessee had any right in the land and the building constructed by him, whether under the release deed dated 13-11-1967, or otherwise, oa the relevant date, within the meaning of sub-paragraph (c) of Paragraph A of Part I of the Schedule to the Wealth-tax Act, 1957. As the wording of the question is rather vague, and docs not bring cut the true scope of the reference, we have reframed it as follows :-

(3.) This is neither a new nor a different question, but is well within the framework of the question as was originally referred to us. The learned counsel on both sides, have in fact, addressed their arguments on the basis of the question as reframed above. The relevant facts, in brief, are that R. B. Nathuram Friends Colony Cooperative House Building Society Limited, hereinafter referred to as 'the society', agreed to allot plot No. 58, situated in Friends Colony, New Delhi, admeasuring 1927 sq. yds. to one Smt. Gurdevi on March 14, 1962. Smt. Gurdevi entered into an agreement with the assessee, whereby the latter undertook to construct a house on the said plot on the condition that in case Smt. Gurdevi failed to pay the cost of construction, etc. within ten day's on receipt of completion certificate, she would convey to the assessee her allotment rights as well as proprietary rights in the plot and the building constructed thereon. Smt. Gurdevi failed to comply with the said condition and executed a deed of release dated 13-11-1967, under which she released and disclaimed her rights to get the plot transferred by the Society in her name and the, house constructed thereon, in favour of the assessee. The said release deed was not registered. The land, however, was registered in the assessee's name on 4-5-1968, that is, subsequent to the relevant valuation date. The assessee contended that he was not the owner of the property on the valuation date and that the sum of Rs. 3,36,433 spent op the construction of the property was merely an advance made by him to Smt. Gurdevi. The Wealth-tax Officer, however, considered the sum ofRs. 3,36,434 as investment is property and charged the assessee to additional tax leviable on urban immoveable property. The Appellate Assistant Commissioner of Wealth tax in appeal upheld this order as the additional tax leviable, according to him, not only on any building or land, but also MI respect of any right in such building or land. In his opinion, certain rights had accrued to the assessee in the building and land, under the agreement dated 14-3-1962 and release deed dated 13-11-1967, which were caught within the mischief of sub-para (c) of Paragraph A of Part I of the Schedule to the Wealth-tax Act, 1957. The Appellate Tribunal in second appeal, was, however, of the view that the release deed dated 13-11-1967 not having been registered till the valuation date, the assessee acquired no interest or right in the land or the building. The only remedy of the assessee, in the case of default on the part of Smt. Gurdevi, was said to be to proceed against her by instituting a suit for specific performance of the contract and [or for the execution of the sale deed in his favour in respect of the property. There was no question of the assessee having acquired any rights in the building and land either under the construction agreement dated 14-3-1962 or release deed dated 13-11-1967. Sub-para (c) of paragraph A of Part I to the Schedule to the Wealth-tax Act, was, therefore, held to be not applicable.