1991 (8) TMI 124 - AT - Wealth-tax

Summary

Issues Involved:
1. Ownership of Gold on Relevant Valuation Dates
2. Effect of Confiscation on Ownership
3. Doctrine of Relation Back
4. Right to Litigate as an Asset

Detailed Analysis:

1. Ownership of Gold on Relevant Valuation Dates
The primary issue was whether the gold could be considered as an asset belonging to the assessees on the relevant valuation dates, and if so, what should be its value. The CIT (Appeals) held that the assessees did not have property in the gold on the valuation dates and that the Dy. Commissioner (Asst.) was incorrect in adopting the value of gold on these dates. The CIT (Appeals) further held that the assessees had a "vestigial interest of property character" in the confiscated gold, valuing this interest at 15% of the actual value of the gold on the valuation dates.

2. Effect of Confiscation on Ownership
The revenue argued that the Supreme Court's decision, which restored the gold to the assessees, implied that the assessees were the owners of the gold on the valuation dates. The revenue contended that the order of the Supreme Court had a retrospective effect, meaning the gold should be considered as belonging to the assessees even during the period of confiscation. However, the CIT (Appeals) and the Tribunal found that the confiscation deprived the assessees of ownership, and thus, the gold could not be considered as their asset on the valuation dates.

3. Doctrine of Relation Back
The revenue's argument that the Supreme Court's order should relate back to the valuation dates was rejected. The Tribunal agreed with the CIT (Appeals) that the doctrine of relation back could not be invoked in this case. The Tribunal emphasized that the orders of the various courts, being orders on writ petitions, were in the nature of judicial review and thus distinguishable from orders in appeal. Therefore, the principle of relating back did not apply, and the gold could not be considered as belonging to the assessees on the relevant valuation dates.

4. Right to Litigate as an Asset
The assessees argued that the right to litigate could not constitute an asset within the meaning of the Wealth-tax Act. The Tribunal agreed, stating that the right to litigate was not an asset capable of exact or reasonably accurate valuation. The Tribunal held that the CIT (Appeals) was unjustified in valuing this right at 15% of the market value of the gold on the relevant valuation dates. Consequently, this portion of the CIT (Appeals)'s order was reversed.

Conclusion:
The Tribunal dismissed the revenue's appeals and allowed the assessees' appeals, concluding that the value of the confiscated gold could not be brought to tax on the relevant valuation dates. The Tribunal also held that the right to litigate was not an asset within the meaning of the Wealth-tax Act.