LexLAKSHMI KANT JHA versus COMMISSIONER OF WEALTH TAX BIHAR AND ORISSA
Open in Lexace · Ask the AI about this caseJudgment (excerpt)
A c D E F H LAKSHMI KANT IHA v. COMMISSIONER OF WEALTII TAX BIHAR AND ORISSA April 16, 1973 [K. S. HEGDB AND H. R. KHANNA, JJ.] We<1/tlr Tax Act 1951, s. 5(1) VIII and 5(l)XV-ls jewellery for per- sonal use exempted-Whefher brokerage charges to be excluded and right to compensation included in the net wealth of the assessee. The assessee, former Maharaja of Darbhanga filed a return for the assessment year 1957-58 declaring his net wealth of more than two and half crores. A revised return was filed subsequently showing a lesser amount. The wealth-tax officer determined the net wealth of the assessee to be more than four and half crores. The assessee held shares and stocks in various companies. The assessee gave correct valuation of those shares but claimed a deduction of more than 2 lakhs by way of brokerage which he would have to pay lf those shar .. were sold in the open market. Further, the assessee claimed deduction from the net wealth of the value of jewellery intended for per- sonal use. Thirdly, the assessee claimed deduction of more than 36 Iakhs. payable to him as compensation by the Government for acquiring his Zamindari l'State, on the ground that it was not known as to when and in what manner the amount would be paid. - The wealth-tax officer rejected all his claims and after estimating the value of compensation to be 75 per cent of its face value, Rs. 27,65,564 was added to the total wealth of the assessee. · On appeal, the Appellate Assistant Commissioner affirmed the decision of the wealth-tax. officer. The Tribunal also rejected the claims of the assessee so far as the brokerage commission and the jewellery was con- cerned. It further held that the valuation of the bonds should be deter· mined to be-65 per cent of the face value. On a reference to the High Court, alt three questions were answered against the assessee. On appeal before this C-0urt. all those three points were raised. Partly allowing the appeal, HELD: (i) As regards the question relating to the jewellery, it was decided in Commissioner of"Wealth Tax, Gujarat v. Arundhati Balkrishna, [1970) 77, J.T.R. 505, that section 5(1)(XV) dealt with jewellery in general whether intended for personal us0 of the assessee or not while jewellery intended for personal use of the assessee came within the scope of section 6(l)(viii) of the Act. It was accordingly held that the value of jewellery of the assessee intended for ~rsonal use of the assessee would stand excluded under section 5(1)(vili) of the Act in computation df the net wealth of the assessee. In the present case, in absence of any plea that the jewellery was not intended for the assessee's personal use and in absence of any retrospective operation of the F"mance Act of 197i excluding jewellery from the purview of cl. VIII of Sec. 5 (I) of the Act, the value of the jewellery for his personal use will not be included in the net wealth of the assessee. [9770) (ii) Regarding brokeragero~sion section 7(1) df the Act provides that subject to any rule made in this behalf, the value of any asset shall be 973 1174 SUPREME COURT REPORTS [1973) 3 S.C.R. estimated to be the price which in the opinion of the wealth-tax officer would fetch if sold in the open market. There is nothing in the language of Sec. 7(1) of the Act which permits any deduction on ·account of the expenses of sale which may be borne by the assessee. The val~e aecording to Sec. 7 (I) has to be the price which the asset would fetch 1f sold- in the open market. Therefore, so far as the construction of Sec. 7(1) of the Act is concerned, in view of its plain language, there is no scope of excluding the expenses of sale of the asset from the price which the asset would fetch if sold in the open market. (980C, DJ Duke of Buccleuc/1 v. Indian Revenue Commissioner, H967] A.C. 506, referred to. (iii) As regards inclusion of the compensation receivable by the assessee from the Government, sec. 32(2) of the Bihar Land Reforms Act, 1950 provides that the amount of compensation payable in terms of a Compensation Assessment-roll shall be paid in cash or in bonds or partly in cash and partly in bonds. Therefore, as soon as the estate vests in the State, the proprietor or a tenure-holder has the right to get com· pensation and this right to get compensation comes under the definition "assets" as given in sect\on 2(e) of the Wealth Tax Act. [982D-E, 983 DJ Maha
Excerpt shown. Read the full judgment & AI analysis in Lexace.