1987 (2) TMI 123 - AT - Wealth-tax

Accounting Year, Agricultural Land, Assessment Year, His Net Wealth, Land Acquisition, Valuation Date

Summary

Issues Involved:
1. Ownership of land on valuation dates.
2. Right to receive compensation.
3. Applicability of exemption under Section 5(1)(iva) of the Wealth-tax Act.
4. Valuation of agricultural land for assessment year 1980-81.

Detailed Analysis:

1. Ownership of Land on Valuation Dates:
The primary issue was whether the assessee continued to be the owner of 3.57 acres of land on the valuation dates (31-3-1980 and 31-3-1981) or had only the right to receive compensation. The tribunal concluded that the land did not vest in the government until the award was passed on 31-8-1984. The judgment emphasized:

> "Simply because the assessee surrendered possession of the land to the Government on 6-10-1979 by consent he does not lose the ownership over the land. Ultimately the land vested in the government only on 31-8-1984 under s. 16 of the Land Acquisition Act."

Thus, the assessee remained the owner of the land on both valuation dates.

2. Right to Receive Compensation:
The tribunal examined whether the right to receive compensation could be considered part of the assessee's wealth. It was held that the right to receive compensation arose only after the award was passed. The judgment stated:

> "The value of the agricultural land of 3.57 acres on 31-3-1980 should be taken to be equal to the present right to get future compensation on the land acquired."

This indicates that the right to compensation was not equivalent to the actual compensation, solatium, and interest fixed under the award.

3. Applicability of Exemption under Section 5(1)(iva):
The assessee claimed exemption under Section 5(1)(iva) of the Wealth-tax Act for the assessment year 1980-81, which pertains to specific types of agricultural land. The tribunal clarified:

> "Exemption is not available for each and every sort of agricultural land. It is available only to tea, coffee, rubber or cardamom plantation is grown in such land."

Since the land in question did not have any of these plantations, the exemption was not applicable.

4. Valuation of Agricultural Land for Assessment Year 1980-81:
For the assessment year 1980-81, the tribunal needed to determine the value of the agricultural land. The judgment considered the future compensation to be awarded and concluded:

> "Taking 80% of compensation ultimately awarded under the award dated 31-8-1984 would be justifiable."

Thus, the tribunal directed the Wealth-tax Officer to adopt 80% of the compensation fixed by the Land Acquisition authorities as the market value of the land for the assessment year 1980-81.

Conclusion:
The tribunal partly allowed the appeal for the assessment year 1980-81 by directing the valuation of the land at 80% of the future compensation and denied the exemption under Section 5(1)(iva). The appeal for the assessment year 1981-82 was fully allowed, recognizing that agricultural land ceased to be considered an asset.