1983 (3) TMI 70 - AT - Wealth-tax

Appeal To Supreme Court, High Court, Land Acquisition, Net Wealth, Right To Receive Compensation, Valuation Date

Summary

Issues Involved:
1. Inclusion of damages and solatium in the net wealth of the assessee.
2. Date on which the right to receive damages and solatium accrued.
3. Market value of the right to receive damages and solatium pending appeal before the Supreme Court.

Detailed Analysis:

1. Inclusion of Damages and Solatium in the Net Wealth of the Assessee:
The central issue in these appeals is whether the damages awarded by the Civil Judge for injuries to the property not acquired under the Land Acquisition Act, 1894, and the solatium granted by the High Court under Section 23(2) of the Land Acquisition Act, should be included in the net wealth of the assessee.

The Wealth Tax Officer (WTO) included these amounts in the net wealth, reasoning that until the High Court's order is reversed, these amounts are assets of the assessee. The assessee contended that since the right to receive damages/solatium was unsettled due to the pending appeal in the Supreme Court, these amounts could not form part of the net wealth.

The Appellate Assistant Commissioner (AAC) accepted the assessee's contentions, distinguishing the case from Pandit Lakshmi Kant Jha v. CWT [1973] 90 ITR 97, where the right to receive compensation was not in dispute. The AAC ruled that since the right to receive damages and solatium was in jeopardy due to the pending appeal, these amounts should not be included in the net wealth.

2. Date on Which the Right to Receive Damages and Solatium Accrued:
The Tribunal had to determine the date on which the right to receive damages and solatium accrued to the assessee. The Tribunal referred to the decision in CWT v. Smt. Preetilata Devi [1980] 123 ITR 382, where the additional compensation awarded by the Civil Judge was included in the net wealth from the date the notification was issued under Section 4 of the Land Acquisition Act.

The Tribunal concluded that the right to receive damages and solatium accrued on the date the notification under Section 4 was issued, not on the dates when the Civil Judge or the High Court awarded these amounts.

3. Market Value of the Right to Receive Damages and Solatium Pending Appeal Before the Supreme Court:
The Tribunal also considered whether the right to receive damages and solatium had any market value given the pending appeal before the Supreme Court. The Tribunal referred to the Supreme Court's decision in Pandit Lakshmi Kant Jha's case, which held that the right to receive compensation is a valuable right and constitutes an asset for wealth-tax purposes, even if the compensation amount is not immediately payable.

The Tribunal rejected the assessee's argument that the pending appeal rendered the right to receive damages and solatium valueless. The Tribunal held that the right to receive these amounts had a market value on each of the relevant valuation dates.

Conclusion:
The Tribunal concluded that the right to receive damages and solatium accrued on the date of the notification under Section 4 of the Land Acquisition Act and had a market value despite the pending appeal. The Tribunal directed the WTO to include the amounts of damages and solatium as finally determined by the Supreme Court in the net wealth of the assessee and modify the assessments accordingly. All the appeals were allowed for statistical purposes.