1986 (12) TMI 93 - AT - Wealth-tax

Summary

Issues Involved:

1. Transfer of Property and Registration
2. Validity of Arbitrator's Award and Court Decree
3. Inclusion of Property in Wealth Assessment
4. Revisionary Powers of the Commissioner

Detailed Analysis:

1. Transfer of Property and Registration:
The primary issue was whether the transfer of Raj Mohalla property to the daughters of Sri Rangadas under the Arbitrator's award constituted a valid transfer of property under Sections 122 and 123 of the Transfer of Property Act. The Commissioner held that the award did not confer ownership rights to the daughters as it did not give them the right of alienation or disposal. The property was not transferred via a registered deed, which is a requirement under Section 17(b) of the Indian Registration Act for transfers involving immovable property of value exceeding one hundred rupees.

2. Validity of Arbitrator's Award and Court Decree:
The assessee argued that the Arbitrator's award, once made a rule of the court, constituted a valid transfer of property. The arbitrator directed the property to be used for the education and welfare of the daughters. However, the Commissioner found that the award and subsequent decree did not effectively transfer ownership of the property. The court's decree was based on an unregistered award, which, according to the Commissioner, could not confer a valid title. The Commissioner concluded that the dispute and arbitration were contrived, and thus, the daughters did not have an antecedent title to the property.

3. Inclusion of Property in Wealth Assessment:
For the assessment year 1982-83, the assessee included only 2/5th share of Raj Mohalla property in his wealth, corresponding to the minor daughters' shares. However, for the assessment year 1983-84, no part of the property was included in the wealth assessment. The Commissioner found this exclusion erroneous and prejudicial to the interests of the revenue. The Tribunal agreed with the Commissioner, noting that the property should have been included in the net wealth of the assessee, at least for the minor daughters' shares.

4. Revisionary Powers of the Commissioner:
The Commissioner exercised his revisionary powers under Section 25(2) of the Wealth-tax Act, finding the Wealth-tax Officer's assessments for the years 1982-83 and 1983-84 erroneous and prejudicial to the interests of revenue. The Tribunal upheld the Commissioner's decision, stating that the Commissioner had the authority to direct the Wealth-tax Officer to reassess the wealth in accordance with the law. The Tribunal found no misapplication of law or misappreciation of facts in the Commissioner's order.

Conclusion:
The Tribunal dismissed the appeals, agreeing with the Commissioner that the wealth-tax assessments were erroneous and prejudicial to the interests of revenue. The Arbitrator's award, being unregistered, did not constitute a valid transfer of property, and the property should have been included in the assessee's net wealth. The Commissioner was justified in directing fresh assessments for both years.