C S ANGRE Vs. COMMISSIONER OF WEALTH TAX

JUDGEMENT

(1.) THIS consolidated reference under Section 27 (1) of the Wealth-tax Act, 1957 (hereinafter referred to as the Act), at the instance of the assessee arises out of wealth-tax assessment for the assessment years 1957-58, 1958-59, 1959-60 and 1960-61. The questions which the Appellate Tribunal has propounded for decision are :--1. "whether the proceedings for reassessment under Section 17 (b) were validly initiated?

(2.) WHETHER the market value as on the valuation date of the instalments due to be paid under the provisions of the Madhya Bharat Abolition of jagirs Act after the valuation date is liable to be included in the total wealth of the assessee?" 2. The material facts are that the asses-see is an ex-jagirdar of the former Gwalior state. His jagir estate was abolished by the Madhya Bharat Abolition of Jagirs Act, 1951 (hereinafter referred to as the Jagirs Act ). The jagir stood resumed as from 4th December 1952 on which date a notification under Section 3 of the Jagirs Act was published for the resumption of all jagir lands in the quondam State of gwalior. On the resumption of his jagir the assessee became entitled to receive compensation under Section 8 (1) of the Jagirs Act as determined in accordance with the principles laid down in the Schedule to that Act. The compensation amount became payable to the assessee with interest at a certain rate from the date of resumption till the date of payment. Section 15 of the Jagirs Act provided that the amount of compensation would be paid in maximum ten annual instalments.

(3.) WHEN the wealth-tax assessment for the assessment years in question were first made, the Wealth Tax Officer did not include in the computation of the assessee's net wealth on the relevant valuation date of each assessment year, the amount of compensation instalments which had not become due on the valuation date. Subsequently he noticed a decision of the Allahabad Bench of the Appellate tribunal in the case of wealth-tax assessment of one Dadu Jagdish-singh, an exjagirdar of Rewa, whose jagir had also been resumed under the Vindhya Pradesh abolition of Jagirs and Land Reforms Act, 1952. The Allahabad Tribunal took the view that the entire compensation amount which became payable to the exjagirdar for resumption of his jagir was "an asset in the hands of the assessee and not only the instalments already received but also to be received should be included in the net wealth. " The Wealth Tax Officer, therefore, issued to the present assessee a notice for reassessment under Section 17 (1) (b) of the Act. In the reassessment proceedings the assessee objected to the validity of the notice under Section 17 (1) (b) and also reiterated his contention that the compensation instalments which had not become due on the relevant valuation date could not be included in the compensation of net wealth. Both those objections were rejected by the Wealth Tax Officer who accordingly included in the computation of net wealth the amount of compensation instalments which did not become due and which had not been paid to the assessee before the valuation date. The decision of the Wealth Tax Officer was upheld in first appeal by the Appellate Assistant commissioner and by the Appellate Tribunal in a second appeal which the assessee preferred.