1991 (7) TMI 24 - HC - Wealth-tax

Summary

Issues: Assessment of wealth-tax for the years 1974-75 and 1975-76 based on a civil court decree regarding ownership of property.

Analysis:
The judgment pertains to the assessment of wealth-tax for the years 1974-75 and 1975-76, concerning the ownership of agricultural land and a house based on a civil court decree. The controversy arose on whether the assessee should be considered divested of her title in the property from the date of an oral gift in 1952 or the date of the decree in 1975. The Wealth-tax Officer included the property in the wealth of the assessee for the two assessment years but excluded it for the subsequent year based on the decree. The Appellate Assistant Commissioner ruled in favor of the assessee, while the Tribunal reversed the decision, stating that immovable property cannot be transferred without a registered document and that the decree was passed with the assessee's consent.

The Tribunal's decision was challenged, arguing that until registration, title in property cannot pass from the vendor to the vendee. However, the court emphasized that a declaratory decree holding a party as the owner from a prior date must be recognized, unlike in a sale deed scenario. The counsel for the assessee highlighted the terms of the civil court decree granting ownership to the sons of the assessee from 1952, asserting that the assessee had been divested of her title since then. The non-registration of the gift was addressed, citing precedents that oral gifts of agricultural land were permissible in Punjab before 1955, and compromise decrees did not require registration.

The Revenue contended that the Wealth-tax Officer could question the decree and argued that compensation received under the Land Acquisition Act indicated ownership by the assessee. However, the court declined to entertain this new argument at that stage, stating it required factual adjudication. Ultimately, the court ruled in favor of the assessee, holding that she was divested of her title to the property covered by the decree from 1952. The reference was answered in the negative, in favor of the assessee, with no order as to costs.