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TMI Blog1967 (6) TMI 11X X X X Extracts X X X X X X X X Extracts X X X X ..... ompensation receivable by the assessee from the Government? and (2) Whether the Wealth-tax Officer was right in including in the assessment of the assessee the interest due to it on accrual basis ? " The assessee is a Hindu undivided family and the assessment in question is in respect of the year 1960-61 for which the relevant valuation date is June 30, 1959. The assessee returned a net wealth of Rs. 5,04,200 which included Rs. 11,624.87 being the interest which accrued to the assessee on the loans made to its constituents in connection with money-lending business. The Wealth-tax Officer, however, determined the net wealth at Rs. 6,00,801, and amongst other additions, he made an addition of Rs. 80,000 as representing the amount of co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntions of the assessee and held that since on the valuation date the assessee had a legally enforceable right in respect of the sum of Rs. 80,000, it fell for inclusion in the net wealth of the assessee. With regard to the other contention of the assessee, he was of the view that for wealth-tax purposes, the interest had to be added to the principal amount advanced on accrual basis. It was contended before the Tribunal in second appeal that the inclusion of the sum of Rs. 80,000 in the assessment of the assessee on an estimate basis was illegal. The argument was that, as there was no ascertained amount of money due from the Government, there was no justification for including the same in the assessment of the assessee. With respect to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the amount due from a debtor, it is necessary to include the interest which may have accrued up to the date. It constitutes an asset and has to be taken into consideration in computing the total wealth of the assessee. It is in the nature of a debt to which the assessee is entitled when it seeks enforcement of its claim against its debtor." It has been pointed out that both these questions have been concluded by Bench decisions of this court. On the first question there are three judgments of this court ; two of them are under the Hyderabad (Jagirs Abolition) Act and the other under the Abolition Act. All of them enunciate the same principle, namely, the present liability to pay some money which is ascertainable only in future constitu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lth-tax Act. In Rani Bhagya Laxmamma v. Commissioner of Wealth-tax a Bench of this court, to which one of us was a party, also held that the commutation amount sanctioned by the Government under the Hyderabad (Jagirs Abolition) Regulation and the Hyderabad (Jagirs Commutation) Regulation was an " asset " within the meaning of section 2(e) of the Wealth-tax Act, and where the amount awarded is payable in instalments, wealth-tax is payable not only on the amounts actually paid to the jagirdar before the valuation date but also on the total amount of compensation payable to him under the award. The Bench referred to Mir Imdad Ali Khan v. Commissioner of Wealth-tax in support of its conclusion. The next case which deals with the first quest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e first question will have to be answered in the affirmative and against the assessee. On the second question also our answer is in the affirmative and against the assessee. The interest that accrues on the valuation date forms part of the asset and must be added to the value of the asset to determine the liability for wealth-tax. In an unreported judgment dated 23-7-1966 in R. C. No. 51/63 (Pachigotta Subba Rao v. Commissioner of Wealth-tax) a Bench of this court, consisting of Kumarayya and Sharfuddin Ahmed JJ., was considering a similar question and it was held that for purposes of wealth-tax the amounts due on pro-notes and mortgage bonds, both principal and the interest on the valuation date, have to be taken into account for determi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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