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TMI Blog1984 (2) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... ces of the case, the Tribunal was right in including in the assessee's net wealth a positive figure on account of zamindari compensation without taking into consideration the arrears of agricultural income-tax instead of taking the figure of compensation receivable from the Government of Bihar at nil ? " In order to appreciate the question, it may be necessary to refer to some facts. The question involved before the Full Bench was for the assessment years 1959-60, 1960-61 and 1961-62, corresponding valuation dates of which were the 31st October, 1958, 31st October, 1959, and 31st October, 1960. The assessee is an individual. His estate vested in the State of Bihar under the Bihar Land Reforms Act, 1950, on and from 1st July, 1952, and he is entitled to receive compensation under the Act from the Government. Under s. 3 of the Act, the question arose about the inclusion in the assessee's " net wealth " the value of the estimated amount of compensation receivable by him from the Bihar Government under the Bihar Land Reforms Act, 1950. In the assessment year 1959-60, the WTO estimated the value at Rs. 10,25,123 and included it in the net wealth of the assessee. For the assessment yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 63 Fasli and which was allowed to be deducted by the WTO, the other amounts as claimed by the assessee were not deductible as the arrears were outstanding for more than 12 months, in view of the provisions contained u/s. 2(m) of the Act and the Government letter was not at all helpful to the assessee. Then reference was made to the High Court u/s. 27(1) of the Act raising five questions out of which question No. (iii) as set out hereinbefore is before us. The questions before the High Court including the question which is before us were referred to a Full Bench of the court and the reference was disposed of by the Full Bench of the Patna High Court on 17th September, 1971, and the decision is reported in [1972] 84 ITR 240. The Full Bench decided the question in issue before us against the Revenue and in favour of the assessee holding thereby that, in the facts and circumstances of the case, as nothing was receivable by the assessee in view of the arrears of agricultural income-tax, the value of the asset to the assessee was nil. Though at one point of time there was certain controversy as to whether the right to receive compensation on the vesting of the estate of the appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entioned in that clause in so far as such debts are referable to such assets ; and the provisions of s. 5 shall apply in relation to such assets as if such assets were assets belonging to the assessee. Section 5 deals with the exemption of certain assets. Section 6 excludes certain assets and debts outside India. Section 7 is important which provides the method how the value is to be assessed. It provides that it shall be estimated to be the price which in the opinion of the WTO it would fetch if sold in the open market on the valuation date. Section 2(m) deals with " net wealth upon which tax is levied and reads as follows : " 2. (m) ' Net wealth ' means the amount by which the aggregate value computed in accordance with the provisions of this Act of all the assets, wherever located, belonging to the assessee on the valuation date, including assets required to be included in his net wealth as on that date under this Act, is in excess of the aggregate value of all the debts owed by the assessee on the valuation date other than (i) debts which under section 6 are not to be taken into account ; (ii) debts which are secured on, or which have been incurred in relation to, any prope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e first step in the facts and circumstances of this case was for the WTO to estimate the price which in his opinion the right to compensation of the assessee would fetch if sold in the open market, and after determining the value in the manner aforesaid to deduct therefrom debts owed by the assessee excluding, however, the debts which are mentioned in cls. (i), (ii) and (iii) of s. 2(m) of the Act. I Keeping this scheme of the Act in mind, we have to examine the nature of compensation under the Bihar Land Reforms Act, 1950. Section 3 provides for the notification vesting an estate or tenure in the State and from the date specified in the notification, the estates or tenures of a proprietor or tenure-holder, specified in the notification, will pass on to and become vested in the State. It is not disputed that in this case this has happened in respect of the property in question. Section 4 deals with the consequences of the vesting of an estate or tenure in the State and stipulates different consequences. We are not really concerned with all the various consequences. We may, however, mention cl. (c) of s. 4 which is important for our present purpose. It provides, as it indicates, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cer or the Compensation Officer may, from time to time require for any of the purposes of this Act or for giving effect to any provision thereof. (3) Where any intermediary or other person, referred to in sub-section (1), if so required by a written order of the Collector, fails without sufficient cause, to produce such documents, or to furnish such information at such time and place as may be specified in the order, such intermediary or other person, as the case may be, shall be liable to a penalty which may extend to fifty rupees for every day after the expiration of such time until such documents have been produced or such information has been furnished and such penalty shall be realised as a public demand: Provided that where the sum of such penalty exceeds five hundred rupees, the Collector shall refer the matter to the Commissioner whose orders thereon shall be final : Provided further that the Commissioner may at any time, of Ills own motion or on the application of any intermediary, revise any order of the Collector imposing any penalty and the order of the Commissioner oil revision shall be final. " Section 33 provides for making ad interim payments to proprietors, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd, a clog or a hindrance which, if a proper estimate is made under s. 7(1) by the WTO, he has to take into consideration. It is not a question of deducting the debt but a question of estimation of the value of the asset in question. Learned counsel for the assessee drew our attention to the decision of this court in the case of Standard Mills Co. Ltd. v. CWT [1967] 63 ITR 470 and to a Bench decision of the Bombay High Court in the case of CWT v. Purshottam N. Amersey [1969] 71 ITR 180. These decisions, in our opinion, are not relevant at all. Reliance was also placed on a decision of this court in the case of Pandit Lakshmi Kant Jha v. CWT[1973]90 ITR 97. This question was not in issue but it was reiterated that under the Bihar Land Reforms Act, 1950, as soon as the estate or a tenure of proprietor or tenure-holder vested in the State, he became entitled to receive compensation. The right to receive compensation from the State was a valuable right. The fact that compensation was not payable immediately and its payment might be spread over a period of 40 years would be relevant only for the purpose of evaluating his right to compensation. The right to receive compensation even th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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