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TMI Blog1984 (2) TMI 2X X X X Extracts X X X X X X X X Extracts X X X X ..... rt have been granted are questions Nos. 2, 3 and 4 in Tax Cases Nos. 64 to 68 of 1967. The questions are as follows : Question No. 2: "Whether, in the facts and circumstances of the case, the decrees obtained by the assessee against Shri A. H. Lal and Shri D. D. Tulsi for Rs. 1,11,747 and Rs. 51,525 respectively, have been valued under the Wealth-tax Act, 1957, by correctly applying the provisions of section 7 of the Act for the purpose of including their values in the net wealth of the assessee ? " Question No 3: " Whether, the sum of Rs. 32,266, the amount of agricultural income-tax due from the assessee, falls for deduction in the hands of the assessee in arriving at his total wealth for the years 1957-58, 1958-59, 1959-60 and 1960-61 ?" ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The arrears of agricultural income-tax is not to be deducted from the net wealth as such but is a factor which the willing purchaser will take into consideration in estimating the value of these assets and that is a factor which should be taken into consideration. The point has been discussed by this court in the case of CWT v. Maharaja Kumar Kamal Singh (Civil Appeals No. 1238 to 1240 (NT) of 1973) [1984] 146 ITR 202 (SC)). The question is, therefore, answered as the answer given in the said appeals and the Tribunal will estimate the value by taking into consideration the possibility for deduction on account of the liability of the assessee on account of agricultural income-tax if it bad not been already deducted in accordance with the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CWT v. Maharaja kumar Kamal Singh [1984] 146 ITR 202 (SC)]. So far as question No. 2 is concerned, while computing the net wealth, the WTO had included the sums of Rs. 8,000 and Rs. 13,011 for the year 1957-58, due from Sri A. K. Hazra and Sri N. Sahay, respectively, on the basis of usufructuary mortgage in favour of the assessee as his assets. On the last point the assessee has obtained relief from the Appellate Tribunal for the year 1957-58 and for that reason these two sums were excluded from the net wealth of the assessee for the subsequent assessment years and that point had given rise to the reference in Tax Cases Nos. 23 to 27 of 1966. On the other questions raised by the assessee, reference in Tax Cases Nos. 64 to 68 of 1967 had a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... valued by the WTO at the figure of Rs. 1,11,747. It was the contention of the assessee that the two decrees bad been erroneously valued and the principles for valuation u/s. 7(1) had not been followed. On the other hand, it was contended on behalf of the Revenue that decrees had been correctly valued u/s. 7(2)(a) of the Act. The High Court held, and in our opinion rightly, that the two decrees had not been valued u/s. 7(2) of the Act at all and had been valued u/s.7(1) of the Act. We are in agreement with the High Court that merely because the assessee had shown the full decretal amounts in his books as still due, would not ipso facto lead to the conclusion that they would be valued at those sums without taking into consideration the hazar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had been estimated at 75% of certain figure. The High Court directed that when the assessee had a claim decree against its debtor, the WTO should ascertain the price that a reasonable person would have paid for it on the relevant valuation date, in open market considering that this claim decree can only be satisfied, wholly or partly from the compensation which the debtor would receive under the Bihar Land Reforms Act, 1950. The claim decree was an asset, the High Court held, but it was wrongly valued by the authorities and directed to be valued by estimating what it would fetch in the open market on the valuation date taking into consideration all the hazards. On the same principle, the other decrees mentioned in the questions have been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alue of any other asset irrespective of the fact whether such an asset-debt is encumbered by another debt owed from the assessee, because the later-mentioned debt can qualify for deduction at its market value independently. About propositions Nos. (1) and (2) above, there cannot be any dispute. But as regards proposition No. (3) as this court has discussed in CWT v. Maharaja Kumar Kamal Singh [1984] 146 ITR 202 (SC), if there is an asset which is subject to certain hazards including the liability of certain debt to be deducted from the said asset, then that factor would be a relevant factor diminishing the market value of the asset in open market and has to be estimated taking into consideration that factor. Regarding proposition No. (4), ..... X X X X Extracts X X X X X X X X Extracts X X X X
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