Value of the route permits held by the transporters should be considered for the purpose of wealth-tax assessments. - Income Tax - 433/CBDT

INSTRUCTION NO. 433/CBDT Dated: June 17, 1972 Section(s) Referred: 2(e)(v) Statute: Wealth Tax Act, 1957 Attention is invited to Board's Circular letter F.No. 4/8/63-W.T., dated 20th May,1963 on the above subject addressed to the Commissioner of Wealth-tax, Punjab, a copy of which was forwarded to all the Commissioners. Section 2(e)(v) of the Wealth-tax Act provides that the term "assets" does not include any interest in property where the interest is available to an assessee for a period not exceeding six years from the date the interest vests in the assessee. In the aforesaid circular letter dated 20th May,1963 it was inter alia mentioned that the value of the route permits held by the transporters should be considered for the purpose of wealth-tax assessments. 2. The Supreme Court in their judgment dated the 6th September 1968 in the case of Commissioner of W.T. Vs. Smt. R.A. Muthukrishna Ammal (1969) 72 I.T.R. 801, had examined the scope of section 2(e)(v) of the W.T. Act. In this case the assessibility of a 25-year lease of salt pans was considered. It was held that the value was not taxable as the interest of the lessee under the lease was precarious: it was liable to be determined by notice by the Government on the expiry of any manufacturing season. The lease-hold interest in the salt pans was, therefore, not available to the assessee for a period exceeding six years from the valuation date, and section 2(e)(v) was applicable. 3. In the light of the ratio of the judgment in the above mentioned case the question of assessability of the value of route-permits to wealth-tax has been re-examined. The Board are of the opinion that if the enactments under which the transporters have been issued the route-permits, provide that the route-permits would appear to be covered by the exemption provided u/s 2(e)(v) of the Wealth-tax Act. In such cases the interest of the assessees would be precarious i.e. there would be no continuity of the route-permits as the Government would always retain the option of not renewing it in favour of the same assessee. It is, therefore, clarified that in the wealth-tax assessments of such transporters whose route-permits, taken under the concerned Motor Vehicle Acts, are for a period of less than six years, the value of the same may not be includible. It is, however, presumed that before giving this exemption the assessing officer would examine each case on its merits viz. the terms of the route-permits, the relevant provisions of the Motor Vehicle Act and the ancillary circumstances and conventions obtaining at a particular place in this regard. 4. The contents of Board's Circular letter F.No. 4/8/63-W.T. dated the 20th May, 1963 are hereby modified to the extent stated in para 3 above. Necessary clarification may kindly be issued to all the assessing officers in the charge accordingly.