COMMISSIONER OF WEALTH TAX, CALCUTTA versus SMT. ANJAMLI KHAN

Citation: [1990] SUPP. 2 S.C.R. 563 · Decided: 06-11-1990 · Supreme Court of India · Bench: K.N. SINGH · Disposal: Appeal(s) allowed

Judgment (excerpt)

' 
COMMISSIONER OF.WEALTII TAX, CALfUTIA 
A 
v. 
SMf. ANJAMLI KHAN 
NOVEMBER 6, 1990 
... • 
[K.N. SINGH AND S. RANGANATHAN, JJ.] 
Wealth Tax Act, 1957: Section 2(e)-Compensation receivable 
on acquisition of Estate-Whether 'asset' includible in the net wealth. 
B 
West Bengal Estates Acquisition Act, 1953: Section 17( ])-Com-
pensation receivable on acquisition-Whether an 'asset' liable to Wealth C 
Tax. 
· 
The Respondent-assessee owned vasf agricultural properties 
which came to be vested in the State Government by virtue of the 
provisions of the West Bengal Estates Acquisition Act, 1953. The asses-
see was entitled to receive compensation in respect of those lands. For D 
the assessment years 1957-58, 1958-59 and 1959-60, the Wealth Tax 
Officer required the assessee to furnish particulars of the compensation 
due from the Government. The assessee was unable to give the particu-
lars, but stated that his agricultural income from the lands used to be 
assessed at Rs.1,00,000 per annum and that the taxes thereon amounted 
to Rs.20,000 per annum. Taking the net agricultural income at E 
Rs;80,000 and applying the provisions of Section 17(1) of the Acquisi-
tion Act the Wealth Tax Officer estimated the compensation payable to 
the assessee at Rs.3,40,000. Deducting the interim compensation 
received by the assessee, he estimated the amount of compensation at 
Rs.3,25,000 for the assessment year 1957-58 and at Rs.3,00,000 each 
for the assessment years 1958-59 and 1959-60. 
F 
The assessee preferred appeals to the Appellate Assistant Com-
missioner on the ground that the compensation receivable was not an 
'asset' under the Wealth Tax Act. The appeal was dismissed. Aggrie-
ved, the assessee appealed to the Tribunal. The Tribunal allowed the 
appeals. On a request from the Revenue, the Tribunal referred the 
G 
question of includibility of the estimated compensation amounts in the 
net wealth of the assessee. The High Court answered the question in 
favour of the assessee. 
Against the said decision of the High Court the Revenue has pre-
f erred these appeals claiming that the decision of this Court in Pandir 
H 
563 
564 
SUPREME COURT REPORTS 
[ 1990] Supp. 2 S.C.R. 
A 
Lakshmi Kant Jha v. CWT Bihar & Orissa, [1973] 90 ITR squarelJ 
governs the issue. 
Allowing the appeals, this Court, 
HELD: I. I. The right to receive compensation in respect of the 
B 
lands acquired under the West Bengal Estates Acquisi1tion Act, 1953 is 
an asset which should he included in the net wealth of the assessee. 
There is no difference in principle between the Bihar Land Reforms Act, 
1950 and the West Bengal Estates Acquisition Act, 1953. The High 
Court and the Tribunal erred in holding that there was no asset the 
value of which could be included in the net wealth of the assessee by 
C 
reference to the lands of the assessee which vested in the State 
Government. 
1.2. The reference to the High Court not only raised the question 
whether there was any asset capable of inclusion in the net wealth but 
also the question as to whether the sums estimated by the Wealth Tax 
D 
Officer on this account can be included in the net wealth of the assessee 
as on the relevant dates. Neither the Tribunal nor the High court have 
touched upon this aspect in view of their conclusion that there was no 
'asset' at all capable of inclusion in the estate. 
Pandit Lakshmi Kant Jha v. Commissioner of Wealth Tax, Bihar 
E 
& Orissa, [1973] 90 ITR 97; Mrs. Khorshed Shapoor Chenai v. 
F 
Assistant Controller of Esw1e Duty, [1980] 122 ITR 21; Jogindcr Singh 
& Ors. v. Swte of Punjab & Anr., [1985] 1SCC231; relied on. 
Commissioner of Weailh Tax v. 0.C. Mahatab. [1970] 78 ITR 
214; referred to. 
2. It would not be necessary to determine the question whether 
the valuation of the said asset at the figures taken by the wealth-tax 
officer is correct or not. This is a question which will have to be con-
sidered and decided by the Tribunal while disposing of the matter in 
conformity with this judgment. The Wealth Tax Officer has included in 
G 
the net wealth the entire amount of the compensation that would 
eventually become payable to the assessee without making any allo-
wance, as was done in Pandi1 Lakshmi Kant Jha's case, for the cir-
cumstance that the compensation was payable at a future date. It is 
clear that, where the compensation is to be determined and is payable at 
a date much later then the valuation date, the value of the assessee'• 
H 
right to

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