1970 (12) TMI 30 - HC - Wealth-tax

Whether the leasehold right of the assessees in respect of the lands in question with the right to win mica mine therefrom constitutes an asset within the meaning of the Wealth-tax Act - Whether the assessees are entitled to exemption from wealth-tax u/s 2(e)(v) in respect of the leasehold interest in the Mica Mine

Issues Involved:
1. Whether the leasehold right of the assessees in respect of the lands in question with the right to win mica therefrom constitutes an asset within the meaning of the Wealth-tax Act.
2. Whether the assessees are entitled to exemption from wealth-tax under section 2(e)(v) of the Act in respect of the leasehold interest in the Sitarama Mica Mine.
3. Whether the valuation upheld by the Tribunal in respect of Siddeswara, Rajyalakshmi, and Satyanarayana Mines is reasonable and proper, while those assets were assessed at a different value in the estate duty proceedings of the applicant's mother.
4. Whether the value of the rice mill at Kota and the house property in Madras gifted by the applicant to her minor sons is liable to inclusion in the net wealth of the applicant.

Issue-wise Detailed Analysis:

1. Leasehold Right as an Asset:
The court addressed whether the leasehold right of the assessees in respect of the lands with the right to win mica constitutes an asset under the Wealth-tax Act. The definition of "assets" under section 2(e) of the Wealth-tax Act includes "property of every description, movable or immovable." The court concluded that the leasehold interest in a mica mine is property that can be owned and enjoyed by a person for a specific period. Therefore, the leasehold right constitutes an asset within the meaning of the Wealth-tax Act. The court answered this question in the affirmative and against the assessee.

3. Valuation of Siddeswara, Rajyalakshmi, and Satyanarayana Mines:
The court examined the reasonableness and propriety of the valuations of the Siddeswara, Rajyalakshmi, and Satyanarayana Mines on the respective valuation dates. The Tribunal's finding on the valuation was supported by ample material on record, and the court found no reason to interfere with it. Consequently, the court answered this question in the affirmative and against the assessee.

2. Exemption from Wealth-tax under Section 2(e)(v):
The court analyzed whether the assessees are entitled to exemption from wealth-tax under section 2(e)(v) of the Act in respect of the leasehold interest in the Sitarama Mica Mine. Section 2(e)(v) excludes "any interest in property where the interest is available to an assessee for a period not exceeding six years from the date the interest vests in the assessee." The court noted that the order reducing the lease period from 30 to 21 years was passed on June 27, 1959, and was not retrospective. Therefore, on the relevant valuation dates for the assessment years 1957-58, 1958-59, and 1959-60, the unexpired portion of the lease was more than six years. For the assessment year 1960-61, the lease was renewed for another 20 years before the valuation date. Hence, the court answered this question in the negative and against the assessee.

4. Inclusion of Gifted Assets in Net Wealth:
The court considered whether the value of the rice mill at Kota and the house property in Madras gifted by the applicant to her minor sons should be included in the net wealth of the applicant. Section 4(1)(a) of the Wealth-tax Act includes the value of assets held by minor children to whom such assets have been transferred by the individual otherwise than for adequate consideration. The court distinguished this provision from section 16(3)(a) of the Indian Income-tax Act, 1922, which was interpreted in the Sodra Devi case. The court held that the words "an individual" in section 4(1)(a) should be read in a distributive sense, referring to both males and females. Therefore, the value of the gifted assets should be included in the net wealth of the applicant. The court answered this question in the affirmative and against the assessee.

Conclusion:
The court concluded that the leasehold right constitutes an asset, the valuations of the Siddeswara, Rajyalakshmi, and Satyanarayana Mines were reasonable, the assessees were not entitled to exemption under section 2(e)(v), and the value of the gifted assets should be included in the net wealth of the applicant. The assessees were directed to pay the costs of the Commissioner of Wealth-tax, with counsel's fee fixed at Rs. 400.

← Previous Next →