COMMISSIONER OF WEALTH-TAX, MADRAS versus SMT. MUTHUKRISHNA AMMAL

Citation: [1969] 2 S.C.R. 1 · Decided: 06-09-1968 · Supreme Court of India · Bench: J.C. SHAH · Disposal: Dismissed

Cited by 2 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

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' 
( 
A 
COMMISSIONER OF WEALTH-TAX, MADRAS 
B 
c 
D 
v. 
SMT. MUTHUKRISHNA AMMAL 
September 6, 1968 
[J. C. SHAH, V. RAMASWAMI AND A. N. GROVER, JJ.] 
Wealth-tax Act s. 2(e) (v)-"Asset"-Definition of-Unexpired period 
of lease in excess of six years-Terminable in any year by notice from 
either party-If an "asset" to be included in computation of wealth. 
By two agreements of January 1, 1943 
and January 1, 1945, 
the 
respondent obtained on lease from the 
Government certain salt pans. 
Each lease was to endure for 25 years but was liable to be determined by 
notice on either side at the close of any salt manufacturing season. The 
respondent sublet the rights under one lease for Rs. 15,000 per year and 
under the other lease for Rs. 18,000 per year. In the course of the 
respondent's assessment to wealth-tax for the assessment year 1959-60, 
the Wealth-tax Officer calculated the value of the respondent's interest in 
the salt pans for the unexpired period of the two leases and included it in 
the computation of her net wealth. His order Was confirmed by 
the 
Appellate Assistant Commissioner but the Tribunal, in appeal, held that 
the interest of the respondent in the salt pans was not an "asset", within 
the meaning of s. 2(e)(v), and could not be included in the respondent's 
net wealth. The High Court, upon a reference, confirmed the view taken 
by the Tribunal. 
On appeal to thls Court, 
E 
HELD : Dismissing the appeal, 
F 
G 
H 
Interest in property which ls available to the tax-payer for a period 
not exceeding six years from the valuation date is not an asset within the 
meaning df s. 2( e) and the value thereof cannot be included in the net 
wealth of the assessee for the financial year relevant to the valuation date. 
The interest of the lessee under each lease was precarious : it was liable 
to be determined by notice by the Government 
at the expiry of any 
manufacturing season. The leasehold interest in the salt pans was there-
fore not available to the assessee for a period exceeding six years from 
the valuation date. [4 C; 6 A] 
There was no force in the contention that the expression "is available 
to an assessee for 
a period not exceeding the six years" in clause 
s. 2(e) (v) means is and has been available to an assessee for the period 
of six years before the date of valuation and that if interest in property 
though revocable has remained unrevoked for more than six. years before 
the valuation date, the interest would be an asset within the meaning 
of s. 2(e). [4 E-F] 
The terms of the clause ''from the date the interest vests in the 
assessee" added after the expression "six. years" in clause 2(e) (v) by the 
Wealth-tax (Amendment) Act, 1964 do not show that the amendment 
was intended to be a parliamentary exposition of the meaning of the 
original clause. [5 G] 
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1922 of 
1967. 
2 
SUPREME COURT REPORTS 
[1969] 2 S.C.R. 
Appeal from the judgment and order dated September 4, 1964 
of the Madras High Court in T. C. No. 237 of 1962 (Reference 
No. 132 of 1962). 
B. Sen, R. N. Sachthey and B. D. Sharma, for the appe!laint. 
T. A. Ramachandran, for the respondent. 
The Judgment of the Court was delivered by 
Shah, J. 
By two agreements dated respectively January 1, 
A 
• 
B 
1943 and January 1, 1945, the respondent Muthukrishna Ammal 
• 
obtained from the Government of India on lease certain salt pans. 
Each lease was to endure for twenty-five years unless otherwise 
• 
determined under the covenants of the indenture. 
The right c 
under the first lease was sublet by the respondent to one K. Nadar 
in consideration of an annual payment of Rs. 15,000 and the right 
under the second lease was sublet to Mettur Chemicals Ltd. in 
consideration of an annual payment of Rs. 18,000. 
The respondent made a return for the assessment year 1959-60 
under the Wealth-tax Act of net wealth of Rs. 3,000 in India and 
Rs. 2,64,500 in foreign countries. 
The Wealth-tax Officer held 
that the value of the interest of the respondent in the salt pans for 
the unexpired periods of the two leases was liable to be included 
in the computation of her net wealth. 
V alning the leasehold 
interest in the salt pans at the average rate of income received from 
the last three years, for the unexpired terms, the Wealth-tax Officer 
brought to tax in addition to the net wealth returned by the res-
pondent an aggregate amount of Rs. 1,89,330. The order was 
confirmed by the App

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