1991 (2) TMI 42 - HC - Wealth-tax

Issues Involved:
1. Determination of the assessee's interest in the estate for various assessment years.
2. Applicability of the circular of the Central Board of Direct Taxes No. 2 - D (WT) dated May 15, 1964.

Detailed Analysis:

1. Determination of the Assessee's Interest in the Estate:

The primary issue revolves around the valuation of the property for the assessment years 1970-71 to 1978-79. The estate in question was acquired by the government for the Kerala Agricultural University. The valuation dates span from March 31, 1970, to March 31, 1978. The key events include the issuance of notifications under the Land Acquisition Act, possession by the government, and subsequent legal proceedings regarding compensation.

The Tribunal initially determined the value based on the Land Acquisition Officer's assessment, adding varying percentages of additional compensation awarded by the sub-judge for different assessment years. The percentages ranged from 20% to 50% of the additional compensation awarded by the sub-judge.

The High Court noted that the Tribunal's decision was significantly influenced by the Income-tax Appellate Tribunal, Hyderabad Bench's decision in WTO v. P. Sriramulu Naidu, which was not available for review. Consequently, the High Court found it impossible to effectively address the questions posed without this critical information.

Moreover, the High Court's judgment on January 28, 1987, in L. A. A. No. 247 of 1980, which modified the award of the Land Acquisition Court, was not considered by the Tribunal. This judgment has substantial relevance in fixing the value of the assets on the respective valuation dates.

The High Court emphasized that for the year 1970-71, the value of the land or property should be determined. For subsequent years, the right to receive compensation at the market rate on the valuation date under the Wealth-tax Act should be considered. This right to receive compensation is an asset that must be evaluated and included in the net wealth as on the relevant valuation dates.

The High Court directed the Income-tax Appellate Tribunal to restore the appeals and reconsider the matter afresh, taking into account the judgment in L. A. A. No. 247 of 1980 and the principles highlighted in the judgment.

2. Applicability of the Circular of the Central Board of Direct Taxes No. 2 - D (WT) dated May 15, 1964:

The Tribunal applied the circular of the Central Board of Direct Taxes No. 2 - D (WT) dated May 15, 1964, in determining the value of the assets. However, both parties agreed that this circular was inapplicable to the present case.

The High Court confirmed that the circular had no application to the instant case and that the Tribunal's reliance on it was misplaced. The Tribunal's decision was also influenced by the Hyderabad Bench's decision, which was not available for review. This lack of critical information led the High Court to decline answering the questions referred by the Tribunal.

Conclusion:

The High Court declined to answer the questions referred by the Income-tax Appellate Tribunal due to the unavailability of the Hyderabad Bench's decision and the inapplicability of the CBDT circular. The High Court directed the Tribunal to reconsider the appeals in light of the judgment in L. A. A. No. 247 of 1980 and the principles outlined in the judgment. The references were disposed of accordingly, and a copy of the judgment was ordered to be forwarded to the Income-tax Appellate Tribunal, Cochin Bench.

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