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Valuation of claim for compensation of properties in East Pakistan seized by the Government of Pakistan and subsequent payment received by the assessee as ex gratia payment. Analysis: The judgment involved three appeals by the assessee against a consolidated order passed by the Commissioner (Appeals) regarding the valuation of the assessee's one-third share in properties in East Pakistan, now in Bangladesh. The properties vested in the Government of Bangladesh, and the assessee filed a claim for compensation, resulting in a payment of Rs. 14,55,153. The Commissioner (Appeals) valued the claim at Rs. 12,50,000, which the assessee challenged before the Tribunal. The Tribunal considered the ownership of the properties, noting that they vested in the Government of Pakistan and later in the Government of Bangladesh. The Government of India provided relief to Indian nationals with seized properties in Pakistan through an ex gratia payment scheme. The Tribunal analyzed the nature of the payment received by the assessee, concluding that it was a humanitarian relief and not a legally enforceable claim. The Tribunal disagreed with the Commissioner (Appeals) on the valuation of the claim and held that the payment did not stem from a right to receive compensation, as clarified by the notice issued by the custodian of enemy property for India. The Tribunal also addressed the department's argument that the payment was made against a claim under the Tashkent Agreement. However, the Tribunal found no evidence to support that a right accrued to the assessee under the agreement. Additionally, the Tribunal cited Circular No. 385, which stated that ex gratia payments from the Consolidated Fund of India could not be assessed for wealth tax due to the absence of a legally enforceable claim. The Tribunal emphasized that the circular was not in conflict with any legal provision and, therefore, upheld the assessee's appeal, deleting the addition of Rs. 12,50,000 made by the Commissioner (Appeals) for all the assessment years under consideration. In conclusion, the Tribunal allowed the appeals filed by the assessee, determining that the ex gratia payment received was not subject to wealth tax due to the absence of a legally enforceable claim, as clarified by the circular issued by the Board.
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