1985 (7) TMI 128 - AT - Wealth-tax

Summary

Issues Involved:
1. Whether the asset held by the assessee on the valuation date was agricultural land or the right to receive compensation.
2. The valuation of the right to receive compensation.
3. Whether there was a mistake apparent from the record in the Tribunal's original order requiring rectification.

Issue-Wise Detailed Analysis:

1. Whether the asset held by the assessee on the valuation date was agricultural land or the right to receive compensation:

The Tribunal initially held that the asset held by the assessee on the valuation date was the right to receive compensation, not the agricultural land itself. The Tribunal stated, "The said agricultural land had already been acquired and an award with regard to the compensation payable in respect thereof had been given by the Land Acquisition Officer vide his order No. 141 dated 27-8-1965. The asset, therefore, held by the assessee on the valuation date was the right to receive compensation."

However, upon reviewing the assessee's miscellaneous application, it was noted that the Collector had not taken possession of the land until December 1976, which was after the valuation date of 31-3-1975. The Tribunal acknowledged that "the possession of the land was not taken by the Collector up to 31-3-1975." Therefore, the land had not vested in the Government by the valuation date, meaning the assessee continued to own the agricultural land on that date.

2. The valuation of the right to receive compensation:

The Tribunal had previously directed the Wealth Tax Officer (WTO) to reassess the valuation of the right to receive compensation, potentially with the help of a Valuation Officer. This was based on the Supreme Court decision in Mrs. Khorshed Shapoor Chenai v. ACED, which the Tribunal referenced to support its decision to restore the question of valuation to the WTO.

However, given the revised understanding that the land had not vested in the Government by the valuation date, the Tribunal concluded, "Following the above principle, we hold that the assessee continued to remain the owner of the agricultural land on the valuation date. Since the value of the land was Rs. 46,725, which was less than Rs. 1,50,000, it was exempt from wealth-tax under section 5(1)(iva)."

3. Whether there was a mistake apparent from the record in the Tribunal's original order requiring rectification:

The Tribunal recognized that its original decision contained a mistake of law apparent from the record, as it did not consider the fact that the possession of the land had not been taken by the Collector by the valuation date. The Tribunal referred to the Supreme Court decision in Dr. Shamlal Narula v. CIT, which clarified that land vests in the Government only after the Collector takes possession. The Tribunal stated, "The law declared by the Supreme Court is binding on all Courts within the territory of India under article 141 of the Constitution and obviously omission to follow it would be a mistake of law rectifiable under section 254(2)."

The Tribunal concluded that the mistake was "one of law" and directed the amendment of its original order. It deleted paragraphs 14 to 16 of the order dated 27-7-1981 and substituted a new paragraph 14, reflecting the correct legal position that the assessee remained the owner of the agricultural land on the valuation date.

Conclusion:

The Tribunal allowed the assessee's application, recognizing that the land had not vested in the Government by the valuation date and thus the assessee continued to own the agricultural land. Consequently, the value of the land, being Rs. 46,725, was exempt from wealth-tax under section 5(1)(iva) of the Wealth-tax Act, 1957. The Tribunal directed the deletion of Rs. 2 lakhs from the assessment and amended its original order accordingly.