COMMISSIONER OF WEALTH TAX Vs. MEATTLES PRIVATE LIMITED

JUDGEMENT

(1.) IN compliance with directions of this Court in WTC No. 1 -D/65, the Income -tax Appellate Tribunal (for short called "the Tribunal") drew up a statement of case and referred for the decision of this Court the following question of law :

(2.) THE reference arises out of the assessment to wealth -tax of Meattles (P) Ltd. of Delhi for the asst. year 1957 -58. The relevant valuation date is 31st March, 1957. While completing the assessment of Meattles (P) Ltd. for the asst. year 1957 -58 to wealth -tax, the WTO included in the net wealth of the assessee the value of certain assets compendiously described as the Crown Flour mills (for short called "the mills"). According to the assessee, the mills had been sold by it to its subsidiary company known as Hindustan Cold Storage and Refrigeration Pvt. Ltd. (for short called "the company") for a sum of Rs. 8,75,000, on 1st Feb., 1957. The WTO did not agree that there had been a sale of the mills on 1st Feb., 1957, as contended by the assessee. The reasons for this conclusion are discussed at great length in the order of assessment to income -tax made on the assessee for the asst. year 1957 -58. In that assessment, the assessee had claimed that as a result of the sale, it had incurred a loss of Rs. 3,58,783 and the loss was claimed as allowable under the provisions of S. 10(2)(vii) of the Indian IT Act, 1922 (for short called "the 1922 Act"). The ITO took the view that there had been no sale. He, therefore, disallowed the assessee's claim for the said loss. On the other hand, he included in the assessment of the assessee the income of Rs. 94,023 derived from the mills in the months of February and March, 1957. This matter arising out of, the income -tax assessment eventually came to this Court for its consideration in IT Ref. No. 22 of 1965 [CIT vs. Meattles (P) Ltd. (1972) 84 ITR 37 (Del)]. The facts relevant for the transaction out of which the present reference arises are all identical with those that have been considered by this Court in the above -noted income -tax reference, and hence the statement of case as well as the decision of this Court in IT Ref. No. 22 of 1965 are treated is part and parcel of the statement of case in this wealth -tax reference.

(3.) THE assessee went up in second appeal before the Tribunal. The Tribunal referred to the facts of the case as stated in detail in income -tax appeals and the findings recorded in income -tax appeals. It was pointed out that though the company had not acquired a perfect legal title to the mills, the assessee was not in a position to claim possession thereof from the subsidiary company in view of the provisions of S. 53A of the T. P. Act, that the subsidiary company was virtually the owner of the property and the vesting of full -fledged title is only a question of time, that the legal title which remained vested in the assessee in the present case was incapable of enabling the assessee to exploit and enjoy any benefit, much more full benefits of the title to the property, and that thus the value of the legal title to the mills vested in the assessee was nil and, therefore, no amount remained to be included in the net wealth of the assessee. The Tribunal pointed out that under S. 3 of the WT Act, 1957 (hereinafter called "the Act"), r/w S. 2(m), " net wealth" means all the assets "belonging to the assessee on the valuation date". In the opinion of the Tribunal, the expression belonging has to be understood in its ordinary and popular sense and not in a technical sense as possessing title and though the legal title to the mills in the present case remained vested in the assessee, the mills could not be said to belong to the assessee. The Tribunal further pointed out that the wealth -tax assessment of the assessee included not merely the value of the properties in question but also the price realised by the assessee for selling the same and this is also an additional reason for deleting the value of the mills from the assessment under appeal.