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TMI Blog1972 (5) TMI 11X X X X Extracts X X X X X X X X Extracts X X X X ..... consolidated statement of cases relating to the same years (numbered in this court as Tax Cases Nos. 64 to 68 of 1967), sent at the instance of the assessee, the following questions have been referred for opinion: "(1) Whether, in the facts and circumstances of the case, compensation payable under the Bihar Land Reforms Act is in law an 'asset' which could be included in the assessee's net wealth as defined in section 2(m) of the Wealth-tax Act? (2) Whether, in the facts and circumstances of the case, the sum of Rs. 1,11,747 and Rs.51,525 due to the assessee under the decrees against Sris A. H. Lal and D. D. Tulsi constitute his wealth for the purpose of the Wealth-tax Act? (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? (4) Whether the sum of Rs. 1,45,375, Rs. 20,001 Rs. 32,000, Rs. 58,967 and Rs. 92,500 due from Tikait Girja Prasad Singh, Shri Gangeshwar Prasad Singh, Mahanth Mahabir Das, Sri jamuna Prasad Missir, Sarjug Kumar, Kishore and Lakshmi Narain Singh and Raja Prithvichand Lal Chaudhary, respectively, fall for assessment in the hands of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ears and that point has 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 have arisen. After hearing the parties, some of the questions referred to this court by the statements of cases dated the 12th December, 1966, were reframed as follows: Question No. 2. "Whether, in the facts and circumstances of the case, the decrees obtained by the assessee against Shri A. H, Lai 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?" Question No. 4. "Whether the sums of Rs. 5,97,909 due from Tikait Girja Prasad Singh, Rs. 40,001 due from Sri Gangeshwar Prasad Singh, Rs. 64,000 due from Mahanth Mahabir Das, Rs. 39,773 due from Sri Lakshmi Narain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the Wealth-tax Officer at the figure of Rs. 1,11,747. The learned counsel for the assessee has contended that the two decrees have been erroneously valued and the principles for valuation laid down by section 7(1) of the Wealth-tax Act have not been followed. According to the learned counsel for the Wealth-tax Commissioner, the decrees have been correctly valued under section 7(2)(a) of the Act, inasmuch as the two decrees continued in the books of the assessee at their full value. It will be convenient, at this stage, to reproduce the relevant sections of the Wealth-tax Act here: "7. (1) Subject to any rules made in this behalf, the value of any asset, other than cash, for the purposes of this Act, shall be estimated to be the price which in the opinion of the Wealth-tax Officer it would fetch if sold in the open market on the valuation date. (2) Notwithstanding anything contained in sub-section (1),- (a) where the assessee is carrying on a business for which accounts are maintained by him regularly, the Wealth-tax Officer may, instead of determining separately the value of each asset held by the assessee in such business, determine the net value of the assets of the busin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... property. The answer to this question is in the negative. For Question No.3 The amount of Rs. 32,266 could not be deducted as a debt owed by the assessee on any of the valuation dates under section 2(m) of the Act, as this was outstanding for a period of more than twelve months on the earliest valuation date, namely, the 20th September, 1956. The Wealth-tax Officer mentioned in his order for the assessment year 1957-58 that there was no evidence as to when the liability for the agricultural income-tax owed by the assessee arose and, therefore, this claim was disallowed. The same point was repeated in the assessments of the subsequent years. But the learned counsel for the assessee has claimed a deduction of this liability in each year, on the strength of a recent Full Bench decision of this court, in the case of Maharaj kumar Kamal Singh v. Commissionerr of Wealt-tax. It is contended that in estimating the value of the assessee's asset for each of the four years in question, this amount ought to have been deducted as a liability, as all hazards in the way of realising the assets of the assessee must be taken into consideration for valuing the assets under section 7(1) of the Weal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted. We had heard learned counsel for the parties earlier and by order dated the 14th April, 1971, we had called for a supplementary statement of the case from the Tribunal by stating thus: In question No. 4, five sums of money have been mentioned, namely, Rs. 1,45,375, Rs. 20,001, Rs. 32,000, Rs. 58,967 and Rs. 92,500. But, in giving the names of the debtors more than five names have been mentioned. The Appellate Tribunal should, therefore, be more precise and state what sums are said to be due from each of the eight debtors mentioned in this question. [We assume that the name, Kishore, has been mentioned for Nandkishore Singh.] The Appellate Tribunal should also state more precisely how these amounts are said to be due, as apparently these sums do not represent the original dues. That is to say, if these amounts due are based on civil court decrees, the matter may be specifically mentioned. If they are due on claims adjudicated under the Bihar Land Reforms Act, that may also be specifically mentioned. If any amount is merely due on loan, or any other kind of decrees, that should also be specifically mentioned. Then, the Appellate Tribunal should also clearly state what value was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7, a loan of Rs. 5,68,000 was taken by the court of wards of estate of Tikait Girja Pd. Singh through the manager of the estate under a simple mortgage of the entire Gawan Estate T. No. 11, consisting of 226 villages. Before the loan was repaid, the estate vested in the State under the Bihar Land Reforms Act on May 28, 1952. The assessee's claim was allowed under section 14 of the Bihar Land Reforms Act by the Sub-judge, Claims Officer, Chotanagpur Division, Hazaribagh, for the principal amount of Rs. 5,19,775-12-0 and for interest at Rs. 97,706-14-0. Some amount was paid by the judgment debtor and the amount finally due was Rs. 5,97,909-5-0. When the matter under Claim Appeal No. 75/1956 went to the hon'ble High Court, the High Court decided the claim of the assessee to be somewhere between Rs. 2 lakhs to Rs. 3 lakhs." On the observation made by this court in the claim appeal, the Wealth-tax Officer stated in the assessment order for the year 1957-58, that, as the assessee was entitled to zamindari compensation in respect of the zamindari of Tikait Girja Prasad Singh, which has vested in the Government, the value of the compensation of rupees three lakhs at 75 per cent. for the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 68/3 of 54/55 in the court of Sub-judge, Bhagalpur, under the Bihar Land Reforms Act." The Wealth-tax Officer had valued this claim decree at 75 per cent. of its face value and the Appellate Assistant Commissioner reduced this to 50 per cent. of the face value of the decree and this was affirmed by the Tribunal. For the same reason that we have given while dealing with the claim decree against Tikait Girja Prasad Singh, it must be held that the method of valuing the claim decree obtained against Gangeshwar Prasad Singh has been erroneous, although it is an asset of the assessee for the purpose of valuing under the Wealth-tax Act. Rs. 64,000 due from Mahanth Mahabir Das has been mentioned in annexure "A" as follows: "Rs. 32,000 loan was taken by Mahanth Mahabir Das against two mortgage bonds against mortgage of zamindari interest. After the zamindari vested in the State the claim was settled at Rs. 64,000, vide judgment dated February 8, 1957, in Claim Case No. 21/1 of 54/55 of 56 before the Claims Officer, Sub-judge, Bhagalpur, under the Bihar Land Reforms Act." The Wealth-tax Officer calculated 75 per cent. of this amount as the value of this claim decree and this was reduced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... culated 75 per cent. of Rs. 1,85,000 to be the value of this decree and this was reduced to 50 per cent. by the Appellate Assistant Commissioner. This was affirmed by the Tribunal. Here also the decree has been valued erroneously, as indicated above, although this was also an asset of the assessee. Therefore, in all the decrees covered by question No. 4, the Wealth-tax Officer should have applied the same test that we have laid down while dealing with the claim decree obtained by the assessee against Tikait Girja Prasad Singh. Question No. 5.- It is admitted that the assessee has received a bond for a sum of Rs. 1,80,000 in 1961. There is no doubt that the answer to this question must be in the affirmative. Therefore, this amount was correctly valued in the assessment year 1961-62. Now I shall deal with the question referred for opinion in Tax Cases Nos. 23 to 27 of 1966. The answer to this question must be in the affirmative. The facts mentioned in the appellate order of the Tribunal are as follows: A debt of Rs. 8,000 was due from Sri Amal Krishna Hazra. The assessee had obtained a usufructuary mortgage from the debtor and had leased the property back to the latter. The Tribun ..... X X X X Extracts X X X X X X X X Extracts X X X X
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