COMMISSIONER OF WEALTH TAX Vs. SRIMATHI MARTINAMMAL MACHADO

JUDGEMENT

(1.) THE following question, which arose in the course of the assessment to wealth -tax of the assessee for the year 1959 -60, has been referred for our opinion under section 27(1) of the Wealth -tax Act, 1957

(2.) FOR the assessment year in question, the assessee made a return that on the valuation date dated March 31, 1959, her net wealth was Rs. 4, 95, 977. In making that return she did not put any value on the leasehold interest she possessed in certain salt pans. By an agreement dated May 7, 1942, the Central Government had granted a lease in favour of the assessee in respect of a number of salt pans in Milavittan village, near Tuticorin. The lease was to enure for a period of twenty -five years. The Wealth -tax Officer valued that property at Rs. 1, 25, 000, at five times the an nual rent, and included the same in the total assets. Although this was confirmed, on appeal by the department, the Appellate Tribunal on further appeal held that the interest of the assessee in the salt pans could not be regarded as an asset, it being not available to the assessee for a period exceeding six years. This conclusion was reached on a construction of clause (1) of the lease -deed which gave an option to the Government to put an end to the lease by giving six months' notice ending with the salt manufacturing season every year. That clause stated

(3.) THE Wealth -tax Act imposes an annual tax on property owned by a person in effect, it is a tax on capital. Section 3, the charging section, brings to tax the net wealth of the assessee computed as on the date of the valuation. The term "net wealth" has been defined in section 2(m) as meaning