COMMISSIONER OF WEALTH TAX Vs. SHIRINBANOO SMT

JUDGEMENT

(1.) A short but interesting problem which has been posed before us is : what is the valuation of encumbered urban asset for purposes of levy of additional wealth -tax under Paragraph C of the Schedule to the wealth -tax Act. The problem arises in the following circumstances :

(2.) THE pertinent question which, therefore, arises in this reference is : how an encumbered asset situated in the scheduled urban area should be valued for purposes of charging additional wealth -tax on the said urban asset ?

(3.) ON behalf of the assessee these contentions were sought to repelled by urging that what is to be evaluated in the latest case is the encumbered assest or more precisely the right or interest of the assessee in such assest. In other words, the valuation which is to be made either for purposes of wealth -tax on the net wealth of the assessee or for; lapse is the calculation of a part of interest of an assessee in the encumbered assest. Such valuation of the assest in question, according to the learned advocate of the assessee is to be made having regard to the provisions contained in section 7 of the Wealth -tax Act. According to the learned advocate of the assessee in the hands of the mortgagor the asset is to be regarded as subject to the charge and it should valued at first ascertaining the market value of the said property, as if it were free ascertaining the market value of the encumbrance and then deduction the amount of encumbrance the balance would be the value of encumbered asset. As far as the mortgage is concerned, the asset would be includible in his net wealth would be the outstanding principle mount under the mortgage transaction.