1983 (8) TMI 7 - HC - Wealth-tax

Summary

Issues Involved:
1. Inclusion of additional compensation in net wealth for assessment years 1970-71 to 1975-76.
2. Evaluation of the right to receive compensation.
3. Applicability of the Supreme Court's principles in Mrs. Khorshed Shapoor Chenai v. Asst. CED [1980] 122 ITR 21.

Issue-wise Detailed Analysis:

1. Inclusion of Additional Compensation in Net Wealth:
The primary issue was whether the additional compensation awarded by the sub-court and the High Court should be included in the net wealth of the assessee for the assessment years 1970-71 to 1975-76. The Tribunal had held that the additional compensation amount should not be included in the net wealth, as it was not considered an asset under the Wealth Tax Act. The Tribunal reasoned that the right to receive higher compensation was inchoate and had no market value.

2. Evaluation of the Right to Receive Compensation:
The Tribunal's decision was challenged by the Revenue, which argued that the right to receive compensation should be evaluated taking into account the enhanced compensation awarded by the civil courts. The Supreme Court in Mrs. Khorshed Shapoor Chenai v. Asst. CED [1980] 122 ITR 21 held that there are no two separate rights (one to receive compensation and another to receive additional compensation). The right to receive compensation is a single right that is quantified by the Collector and subsequently by the civil courts. The Supreme Court emphasized that the right to receive compensation survives and remains alive until fully satisfied, and the valuation must consider the risks and hazards of litigation.

3. Applicability of Supreme Court's Principles:
The High Court found that the Tribunal's view was not in accord with the Supreme Court's decision. The Tribunal erroneously treated the right to receive additional compensation as a separate right with no value. The High Court clarified that the right to receive compensation should be evaluated by considering the enhanced amounts awarded by the sub-court and the High Court, taking the sub-court's valuation as the minimum. The WTO should evaluate the right to receive compensation, considering the vicissitudes of litigation and other relevant factors.

Conclusion:
The High Court returned the reference unanswered and directed the Tribunal to re-hear the matter in light of the Supreme Court's decision. The Tribunal must allow the Revenue to evaluate the right to receive compensation as per the principles laid down by the Supreme Court. The same order applies to Tax Cases Nos. 411 to 416 of 1978, with no order as to costs in all the cases.