P V JACOB Vs. COMMISSIONER OF WEALTH TAX

JUDGEMENT

(1.) AT the instance of an assessee to wealth-tax, the Income-tax Appellate Tribunal has referred the following question of law for the decision of this court:

(2.) THE applicant is an assessee to wealth-tax. THE question of law posed herein relates to the assessment years 1974-75 and 1975-76. THE relevant valuation dates are March 31, 1974 and March 31, 1975. THE respondent is the Revenue. THE assessee returned a net wealth of Rs. 5,28,800 and Rs. 3,86,058, respectively, for the assessment years 1974-75 and 1975-76. THE assessee is a partner in M/s. Varkey Jacob and Co. with 3/5ths share. THE firm had taken on lease a rubber estate. THE estate was acquired by the State of Kerala under the Land Acquisition Act. THE Wealth-tax Officer found that an amount of Rs. 9,25,000 was awarded to the firm towards compensation for surrendering their leasehold right in the estate. THE firm had not accepted the award. It had initiated proceedings claiming additional compensation in the sum of Rs. 6,67,000 and a solatium of Rs. 1,03,000. THE total additional amount so demanded by the firm in the land acquisition proceedings amounts to Rs. 7,70,000. Taking note of this, the Wealth-tax Officer determined the net wealth of the assessee by adding 3/5ths of the said amount of Rs. 7,70,000 claimed by the firm to the net wealth of the assessee, i.e., a sum of Rs. 4,62,000 for the assessment year 1974-75 and Rs. 4,75,000 for the assessment year 1975-76. THE assessment orders are dated January 3, 1979. Subsequently, additional compensation was awarded by the District Judge by a judgment dated January 30, 1980. At that time, the appeals filed by the assessee were pending before the Appellate Assistant Commissioner. In the appeals, the assessee contended that the Government had objected to the enhanced compensation awarded by the District Court and that the appeal is pending in the High Court. Even so, the Appellate Assistant Commissioner, by order dated July 27, 1982, held that, according to the award already given, the assessee is entitled to the compensation as worked out by the Wealth-tax Officer. However, he held that, in case, at a later stage, the High Court reduced the compensation payable, the assessee may approach the Wealth-tax Officer for reduction of the original assessments. THE assessee carried the matter by way of further appeals before the Appellate Tribunal. THE assessee was not represented before the Appellate Tribunal. THE Appellate Tribunal, while upholding the order of the Appellate Assistant Commissioner, held that in case of any variation by the High Court regarding the additional compensation granted, it is open to the assessee to approach the Wealth-tax Officer for suitable modification in the original assessments on the basis of the judgment of the final court. On the merits, it was held that the Wealth-tax Officer was justified in reckoning the additional amount claimed by way of compensation in determining the total assets. It is thereafter at the instance of the assessee that the question of law formulated hereinabove has been referred for the decision of this court.

(3.) IN the light of the subsequent judgment of this court in L. A. A. No. 247 of 1980, all that is necessary is to hold that it is the duty of the Wealth-tax Officer to give effect to the judgment passed by this court in L. A. A. No. 247 of 1980, dated January 28, 1987, and recalculate or recompute the net wealth for the two assessment years 1974-75 and 1975-76. The assessee shall produce a copy of the judgment rendered in L. A. A. No. 247 of 1980 before the concerned Wealth-tax Officer. He shall give effect to the said judgment as directed by the Appellate Assistant Commissioner and as affirmed by the Appellate Tribunal. It is open to the assessee to raise all his pleas regarding the determination of the net wealth as on the respective valuation dates.