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TMI Blog1989 (12) TMI 75X X X X Extracts X X X X X X X X Extracts X X X X ..... e of K.J.M. Colaco, C. Colaco and E.S. Colaco. The valuation date is the 31st March of the related calendar year. 3. The interest of the partners of the firm M/s. E.S. Colaco Co. was evaluated bearing in mind the Circular of the Central Board of Direct Taxes No. 357, dated 26-3-1983, insofar as the coffee garden is concerned. There is no dispute in regard to this. The firm had pooled coffee to the Coffee Board as required under law every year. Coffee points had been declared by the Coffee Board. The Coffee Board was required to make payments which are normally called 'dividends' in respect of the coffee pooled by the grower. Dividend will not be declared at one stage and it will be spread over in three or four years depending upon sever ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same had not been shown in the balance-sheet of the firm, an addition was made under Rule 2C(d) of the Wealth-tax Rules. Reliance has been placed upon the decision of the Mysore High Court in the case of G.M. Gopalkrishna v. WTO [1964] 51 ITR 575. The addition came to be sustained by the Appellate Asstt. Commissioner in all the impugned assessments. 6. The partners have, in these appeals, been reiterating their plea. According to submission made by Shri Venkatesan, the learned representative for the assessee, a point relevant to the controversy had not been urged in the case of G.M. Gopalkrishna and that the same should be considered by us. Referring to various provisions of the Coffee Act (VII of 1942), he contended that there was no ri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee points before the valuation date, as already mentioned, is reflected in the balance-sheet of the firm. But there was expectancy of further dividends being declared after the valuation date. The Wealth-tax Officer proceeded to value that right treating coffee points as capital asset of the firm. The Mysore High Court has in the case of G.M. Gopalkrishna considered this aspect of the controversy in great detail and held that the right to get dividends as and when declared by the Coffee Board is a valuable right, both enforceable and transferable. It has been held to be an actionable claim, and, as such, an asset as defined in the Wealth-tax Act. Normally, the point raised before us should have been straightaway decided against the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pittance of payment and retain the whole Pool Fund either undistributed or transfer it to the General Fund. First, there is no scope to assume that the Coffee Board would act in a wholly unreasonable manner. The Coffee Board is constituted under section 4(1) of the Coffee Act (VII of 1942) and even the growers have sufficient representation in it. This is only to ensure that the growers would have a proper deal. It may be that at a certain point of time one cannot be in a position to predicate what dividend a grower would get in respect of coffee point declared. This may be little relevant while valuing the asset, but, however, there is absolutely no difficulty in reaching a conclusion that the coffee point owned by a grower is an asset in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lth-tax Officer has adopted the same figure as the amount actually received by the grower after the valuation date. This, we are clear, was not correct. 12. Since this asset has not figured in the balance-sheet adjustment as per Rule 2C(d) was proper. As the provision itself says, this asset has to be valued on the basis of the market value as on the valuation date. The Wealth-tax Officer has blindly adopted the figure which is equivalent to the amount actually declared after the valuation date. If this asset (right to receive dividend in respect of the coffee point as and when declared) is to be sold on the valuation date, a willing purchaser would naturally take into consideration various factors. One would not be in a position to know ..... X X X X Extracts X X X X X X X X Extracts X X X X
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