COMMISSIONER OF WEALTH-TAX Vs. R L WIG

JUDGEMENT

(1.) At the instance of the CWT, Kanpur, the Income-tax Appellate Tribunal, Allahabad Bench, Allahabad, has referred the following question of law for the opinion of this court under Section 27(2) of the W.T. Act, 1957.

(2.) The facts found are that a plot of land, which had been taken on lease by the assessee from the Nagar Mahapalika, Kanpur, was subject to the condition that in case the assessee sells the plot, before making any construction thereon, the Mahapalika would be entitled to a share of 75% in the profit made in the transaction. On the valuation date, namely, March 31, 1972, relevant to the assessment year 1972-73, the plot of land had remained without any construction by the assessee. The WTO computed the price of the plot at Rs. 66,870 on the basis of its assumed market value on that date. He negatived the claim of the assessee that 75% of the amount of increase over the cost of the plot which had been paid by the assessee should be deducted under the aforesaid covenant. This order was upheld by the AAC but the Income-tax Appellate Tribunal, before which the matter went in a second appeal, took the view that on account of the covenant aforesaid, the real wealth in the hands of the assessee in respect of the plot in question could only be worked out after deducting the amount of 75% of the notional profit if the land was to be sold on 31st March, 1972. It followed the view of a Division Bench of the Delhi High Court in this respect. The Department did not accept that view to be correct and sought the present reference.

(3.) The decision upon which the Appellate Tribunal relied was taken in appeal by the CWT, New Delhi, before the Supreme Court. The decision'of the Supreme Court is CWT v. P. N. Sikand [1977] 107 ITR 922.