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TMI Blog1990 (5) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... , F. S. Ghandhi (hereinafter referred to as "the assessee"), owns properties situate at Mahatma Gandhi Marg and Sardar Patel Marg in Civil Lines area at Allahabad. The lands on which these buildings stand were leased out to the assessee by the Government of Uttar Pradesh. The leases in respect of these properties expired in 1958 except in respect of the property situate at 30A, Mahatma Gandhi Marg, which expired in 1963. The Government of Uttar Pradesh issued notices to the assessee to hand over vacant possession of the leasehold lands. The properties are let out to tenants and the assessee was receiving rental income from the same. For the assessment years 1971-72, 1972-73, 1973-74 and 1974-75, the assessee submitted wealth-tax returns wherein he valued the properties at ten times the annual rental income. The Wealth-tax Officer passed assessment orders wherein he valued the properties at fifteen times the annual rental income. On appeal, the Appellate Assistant Commissioner of Wealth tax, valued the said properties at twelve and a half times the annual rental income. On further appeal, the Income-tax Appellate Tribunal (hereinafter referred to as "the Tribunal") valued the proper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d over possession were assets within the meaning of section 2(e)(v) of the Wealth tax Act and its valuation was liable to be included in the net wealth of the assessee ?" This question was amongst the questions referred to the High Court. While dealing with the said question, the High Court has held: "...on the determination of a lease by efflux of time or by notice, it is the duty of the lessee to deliver vacant possession of the demised premises to the lessor. If he continues in possession even after the determination of the lease, his possession is secured inasmuch as the lessor cannot evict him otherwise than in due course of law and if he continues in possession without the assent or dissent of the landlord, he would be tenant at sufferance. His possession would be wrongful but not unlawful. It is wrongful because the erstwhile tenant continues in possession beyond the expiry of the period fixed in the lease. It is not unlawful because the landlord cannot take the law into his own hands and evict him. But in case the landlord expresses his assent by acceptance of rent or otherwise to his continuing in possession, his wrongful possession would be converted into a lawful on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e or immovable, but does not include, (1) in relation to the assessment year commencing on the 1st day of April, 1969, or any earlier assessment year (i) agricultural land and growing crops, grass or standing trees on such land; (ii) any building owned or occupied by a cultivator of, or receiver of rent or revenue out of, agricultural land Provided that the building is on or in the immediate vicinity of the land and is a building which the cultivator or the receiver of rent or revenue by reason of his connection with the land requires as a dwelling house or a store-house or an outhouse; (iii) animals; (iv) a right to any annuity in any case where the terms and conditions relating thereto preclude the commutation of any portion thereof into a lump sum grant; (v) 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 (2) in relation to the assessment year commencing on the 1st day of April, 1970, or any subsequent assessment year (i) animals ; (ii) a right to any annuity in any case where the terms and conditions relating thereto preclude the commutation of any porti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ferring to the present, often has a future meaning. It may also have a past signification as in the sense of "has been" (See Black's Law Dictionary, 5th Edn. p. 745). We are of the view that, in view of the words "for a period not exceeding six years" which follow the word "available", the word "is" must be construed as referring to the present and the future. In that sense, it would mean that the interest is presently available and is to be available in future for period not exceeding six years. The High Court has construed the word "is" to mean "has been". As per the construction placed by the High Court, in a case where an interest has been created for a period exceeding six years, it would be included in the assets of the assessee under section 2(e) of the Act only after the expiry of the period of six years even though the interest is available to the assessee for a period exceeding six years from the date the interest vests in the assessee. The construction placed by the High Court instead of placing emphasis on the nature of the interest attaches importance to the enjoyment of the interest. We are unable to subscribe to that view. In our opinion, the question whether the int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an assessee for a period not exceeding six years', and it must mean that the assessee, though he has interest in property at the valuation date, the interest will remain available for a period not exceeding six years. If it is to remain available for six years or for shorter period the interest will fall within the exception : if it is to remain available for a period exceeding six years, it will fall within the definition of "assets" and its value will be liable to be included in the net wealth of the assessee." In that case, this court has noticed the amendment introduced in sub clause (v) of section 2(e) by the Wealth-tax (Amendment) Act, 1964, but did not consider it necessary to deal with it because the said matter related to the period prior to the said amendment. The High Court has sought to distinguish this decision on the view that the position has changed after the amendment introduced in 1964 and that the insertion of the words "from the date the interest vests in the assessee" means that if an interest has been available to the assessee for a period exceeding six years from the date the interest vests in the assessee, it would be an asset while, prior to its amendme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se (2). It must be assumed that while enacting the Finance Act, 1969, Parliament was aware of the construction placed by this court on these words in CWT v. R. A. Muthukrishna Ammal [1969] 72 ITR 801. In repeating the said words in the amended clause (e) of section 2, Parliament must be taken to have used the said words to bear the meaning which has been put upon them by this court in CWT v. R. A. Muthukrishna Ammal [1969] 72 ITR 801. In the instant case, it has been found that, after the expiry of the leases of the assessee in the years 1958 and 1963, the assessee continued in possession under a new contract of tenancy and the said tenancy was tenancy from month to month for an unstated period. The said tenancy was precarious in nature because it could be terminated by the lessor, viz., the Government of Uttar Pradesh, at any time by a notice under section 106 of the Transfer of Property Act. The fact that such a notice was not given cannot mean that the interest created by the said new tenancy was an interest available to the assessee for a period exceeding six years from the date the interest vested in the assessee. In the circumstances, in view of section 2(e)(2)(iii), the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of those lands and such leases were available to the assessee during the assessment years in question. For the reasons aforesaid, it must be held that the properties in respect of which leases had expired in 1958 and 1963 and notices had been received by the assessee to hand over the possession were not assets within the meaning of section 2(e)(2)(iii) of the Act and the value of the same was not liable to be included in the net wealth of the assessee. Question No. 1 referred by the Tribunal to the High Court must, therefore, be answered in the negative, i.e., in favour of the assessee. Question No. 2 referred by the Tribunal to the High Court is connected with question No. 1 and both the questions were considered by the High Court together. Since question No. 1 is answered in favour of the assessee, question No. 2 must also be answered in the negative, i.e., in favour of the assessee and it must be held that the Tribunal was not right in holding that the interest of the assessee in respect of the properties in dispute was for a period over six years for the purpose of section 2(e)(2)(iii) of the Act. In the result, the appeals are allowed and the judgment and order of the Hig ..... X X X X Extracts X X X X X X X X Extracts X X X X
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