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TMI Blog1971 (9) TMI 29X X X X Extracts X X X X X X X X Extracts X X X X ..... rom the Bihar Government under the Bihar Land Reforms Act. In the assessment year 1959-60 the Wealth-tax Officer estimated the value at Rs. 10,25,123 and included it in the net wealth of the assessee. For the assessment years 1960-61 and 1961-62 the assessee produced a letter from the District Collector, Arrah, to show that the assessee is entitled to compensation of Rs. 4,39,713 only. The Wealth-tax Officer estimated 75% thereof as the market value of the right of the assessee to receive the compensation. Accordingly, he included in the assessee's net wealth Rs. 3,29,784. On appeal, the Appellate Assistant Commissioner reduced the valuation for the first year to Rs. 3,29,784. For the next two years (1960-61 and 1961-62) the Appellate Assistant Commissioner held that it would be reasonable to estimate the market value of the compensation to be received by the assessee at 65% of the face value. The assessee preferred appeals before the Appellate Tribunal regarding assessments for the aforesaid three years and reiterated his contention that the right to receive compensation under the Land Reforms Act was not asset within the meaning of section 2(m) of the Act and could not be includ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the facts and circumstances of the case, the amount of compensation payable to the assessee under the Bihar Land Reforms Act (Act 30 of 1950), constituted an 'asset' within the meaning of section 2(e) of the Wealth-tax Act and so liable to be included in the assessee's net wealth on the three valuation dates relevant for the assessment years 1959-60, 1960-61 and 1961-62. (ii) Whether, on the facts and circumstances of the case, the sums of Rs. 5,10,831, Rs. 4,76,461 and Rs. 4,52,476 being amount of agricultural income-tax outstanding from the assessee for a period of more than 12 months as on the valuation dates, were deductible as debts owed by the assessee in computing his net wealth under section 2(m) of the Wealth-tax Act ? (iii) Whether, on the facts and circumstances of the case, the Tribunal was right in including in the assessee's net wealth a positive figure, on account of zamindary compensation without taking into consideration the arrears of agricultural income-tax instead of taking the figure of compensation receivable from the Government of Bihar at nil ? (iv) Whether, on the facts and circumstances of the case, the amended section 2(m)(iii) prohibiting deductio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded by Mr. Lal Narain Sinha, learned counsel, appearing on behalf of the petitioner-assessee, that it is important from the point of view of the assessee. He drew our attention to section 3 of the Act, which reads as follows : " Subject to the other provisions contained in this Act, there shall be charged for every assessment year commencing on and from the first day of April, 1957, a tax (hereinafter referred to as wealth-tax) in respect of the net wealth on the corresponding valuation date of every individual, Hindu undivided family and company at the rate or rates specified in the Schedule." He submitted that section 3 is the charging section which requires ascertainment of net wealth of the assessee on the corresponding valuation date. The expression " net wealth " is defined under section 2(m), the relevant portion of which is to this effect : " ' Net wealth' means the amount by which the aggregate value computed in accordance with the provisions of this Act of all the assets, whereever located, belonging to the assessee on the valuation date, including assets required to be included in his net wealth as on that date under this Act, is in excess of the aggregate value of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... striction upon the compensation payable to the petitioner and that is bound to affect the market value of that compensation in the open market. None would be ready to purchase the right of the petitioner to receive the compensation and offer its price as much as it would have been offered to him if there would not have been such restriction under the said section. The restriction so placed in the section is definitely a disadvantage attached to it which will affect its market value. Mr. Tarkeshwar Prasad, learned counsel appearing on behalf of the opposite party, on the other hand, raised a preliminary objection to the petitioner's submission with regard to question No. (iii) on the ground that the petitioner had not pleaded about it at the earlier stage. In my opinion, this objection is not tenable. Reference may be made to paragraph 7 of the statement of facts dated 5th September, 1963, submitted by the Appellate Tribunal which clearly mentions that the assessee pleaded before the Tribunal whether the department could interpret the provisions of the Wealth-tax Act to its own advantage only, ignoring other important provisions like the one contained under section 7 of the Act. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is still another disadvantage attached to the right of the outgoing landlord to receive ad interim compensation. The third proviso to section 33 reads as : " Provided that the Collector shall have the power to refuse, suspend or stop any such ad interim payment in the case of any proprietor or tenure-holder who in his opinion has failed or neglected to comply with any order under section 40. " Section 40 empowers the Collector, claims officer and compensation officer to ask for any information from the outgoing intermediary and may also direct him to produce any documents. In Kumar Shyamnand Sinha v. State of Bihar, it was held that even if the petitioner's case that the tauzis vested only from the dates of the two later notifications was accepted, the jurisdiction of the Collector to call for information from 1952 and 1953 in respect of the said tauzis was beyond question. Section 40(1) gives him wide discretion to call for information and papers from the intermediaries or any other persons in possession of the estates for any of the purposes of the Bihar Land Reforms Act or for giving effect to any provision thereof. Hence, irrespective of the actual date of vesting, on which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hold and possess the zamindari bond is not affected by the restrictions contained under section 4(c) and the third proviso to section 33 read with section 40 of the Land Reforms Act. But, so long as he does not receive the bonds, his right to receive ad interim compensation as provided under section 33, is restricted according to the provisions contained under section 4(c) and the third proviso to section 33 read with section 40 of the Land Reforms Act, and those restrictions are enough to affect the market value of the petitioner's right to receive compensation. In the result, question No. (iii) is answered in favour of the assessee. Now I turn to consider question No. (ii). Mr. Sinha drew our attention to the definition of " net wealth " under section 2(m) of the Act the relevant portion of which I have quoted earlier. He submitted that sub-clause (iii) of clause (m) in the Act does not include Bihar Agricultural Income-tax Act. He urged that the intention of the legislature is to include only the Central Acts in sub-clause (iii) as it is evident from the words used therein " the amount of the tax, penalty or interest payable in consequence of any order passed under or in pursua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aken as laws, such as Estate Duty Act, the Expenditure-tax Act or the Gift-tax Act. Their Lordships observed that if that was the intention of Parliament they would have specifically mentioned the Central Act like the Income-tax Act also when they mentioned other Central Acts like the Estate Duty Act, the Expenditure-tax Act and the Gift-tax Act. The very fact that Parliament chose to leave laws relating to taxation of income or profits without any qualification is clearly indicative of its wider scope. All kinds of laws relating to such taxation whether by the State legislature or by Parliament, therefore, are included in that provision. Their Lordships, therefore, held that the agricultural income-tax due from the assessee and outstanding for a period of more than twelve months on the valuation dates was not to be comprised with the aggregate value of the debts owed by him for determining " net wealth ". Mr. Sinha, however, urged that their Lordships have put a wrong interpretation on the expression " any law relating to taxation of income or profits " occurring in sub-clause (iii) of clause (m) of section 2 of the Act. He submitted that the said expression contained generic wor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gardless of the type of statute involved, must the rule be used where the language of the statute under consideration is plain and there is no uncertainty. Its use is permissible only as an aid to the court in the attempt to ascertain the intent of the law makers. Nor will it be proper for the court to follow the rule where to do so will defeat or impair the plain purpose of the legislature. It cannot be employed to restrict the operation of an Act within narrower limits than was intended by the law makers. . . . . .To hold otherwise, would make the legislative intent subordinate to the rule." In Baidyanath Ayurved Bhawan (Pvt.) Ltd. v. Excise Commissioner, U.P., their Lordships observed that in a taxing statute one has to look at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used. Their Lordships with approval also relied on Cape Brandy Syndicate v. Inland Revenue Commissioners. Therefore, we have to see merely the language used in the expression. We cannot presume by reference to item No. 46 of List II of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecide is whether the Tribunal has jurisdiction to decide the said question." (Vide also Commissioner of Income-tax v. Straw Products Ltd. and C. T . Senthilnathan Chettiar v. State of Madras). The same principle applies in the case of a reference under section 27(1) of the Act. Thus, this question could not have been referred by the Tribunal to this court ; nor this court can investigate into the question of ultra vires in its advisory jurisdiction. Therefore, this question is not entertainable at all. Now, I advert to consider question No. (i). Here it has to be decided whether the ad interim compensation payable to the assessee under the Land Reforms Act can be considered as " assets " within the meaning of section 2(e) of the Wealth-tax Act, which defines it thus : " ' Assets' includes property of every description, movable or immovable, but does not include,- (i) agricultural land and growing crops, grass or standing trees on such land ; (ii) any building owned or occupied by a cultivator of, or receiver of rent or revenue out of, agricultural land : Provided that the building is on or in the immediate vicinity of the land and is a building which the cultivator or the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which has been shown in the Act itself how to be computed and paid. That would be, without any doubt, a right relating to property, and, therefore, within the definition of " assets " as given in section 2(e) of the Act. The right to receive compensation arises immediately on vesting of the estate. It is true that the date of payment of compensation or the manner in which it will be paid, has been left within the domain of the State Government, but all the same, until it is paid, the right of the ex-proprietor to that remains unabated. " It may appear," their Lordships observed, " inequitable to charge a subject to tax on that right before any benefit in the shape of any payment, either in cash or in bond, is received by him. But that was a matter for Parliament to take into account. A taxing statute has to be enforced in its letter ; and whether that will bring any inequitable consideration against the subject is not for the court to mediate upon. If the right to compensation from the State in lieu of the estate of which the proprietor was divested is property and is, therefore, included in the definition of 'assets' as given in the Act, there is no escape for that from computati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted for inclusion in the net wealth. In the Patna case also the basis of calculation for wealth-tax valuation was the agricultural income-tax paid on the assessee's zamindari income. They emphasised that the assessee in the Patna case had admittedly received ad interim compensation of Rs. 41,000 from the State of Bihar. That was the approximate amount of compensation payable to the assessee according to section 33 of the Bihar Land Reforms Act. Their Lordships further observed that there was no such provision under the West Bengal Act and that clearly was the distinctive feature between the West Bengal Act and the Bihar Land Reforms Act. That clearly indicates that their Lordships have not differed from the views expressed in Maharajkumar Kamal Singh v. Commissioner of Wealth-tax. On the contrary, their Lordships have approved the view expressed therein on the ground that the provisions contained in the two Acts were different. It is true that the assessee's right to receive ad interim compensation is surrounded with uncertainty and restrictions, as observed earlier. Those may be relevant considerations while ascertaining the market value ; but those are not relevant for the consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act should relate to only laws made by Parliament, it could have very well specifically mentioned the Income-tax Act also in that section. Omission to specifically mention the Income-tax Act, which is the main Central enactment relating to taxation of income or profits and using " any " which expression is wide enough to cover all laws relating to taxation of income or profits, whether they are enacted by Parliament or by State legislatures, manifestly suggests that the intention of Parliament was not to exclude laws relating to taxation of income or profits made by the State legislatures. Amount of tax payable under any law relating to taxation of income or profits passed by the State legislatures is, undoubtedly, a debt and the intention behind the enacting clause (iii) of section 2(m) obviously was that the assessee under the Wealth-tax Act should not fall in arrears in respect of taxes to get them excluded for the purposes of taxation under the Wealth-tax Act. Parliament would have been partial to the Central Government if it would have provided only for Central laws relating to taxation of income or profits and not for State laws. As it could not have enumerated all the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act, the value of the asset, as estimated under section 7, is to be put on the credit side and debts on the debit side. The balance is the net wealth which is liable to be taxed under the Act. If something which is debt within the meaning of section 2(m) of the Act is taken into consideration in determining the value of any asset under section 7, then the assessee will get advantage of that debt twice over, but that is not debt within the meaning of section 2(m) of the Act is taken into consideration in estimating the value of the asset under section 7, the assessee will not get any double advantage. Section 7 lays down that the estimated value of any asset, for the purposes of the Act, is the price which the asset would fetch if sold in the open market on the valuation date. If the asset is subject to certain disadvantage or restriction on the valuation date, certainly the price which it would fetch in the open market will be less than the price it would fetch if it would have been free from such disadvantage and restriction. My learned brother B. D. Singh J. has discussed in detail with reference to the relevant provisions of the Bihar Land Reforms Act and held that the dues w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... answers given to question No. (iii) also but I wish to add that the answer to this question in favour of the assessee can only be of an academic nature. Agricultural income-tax remaining unpaid, even though for more than 12 months is a factor which cannot be excluded from consideration in determining the market value of the zamindari compensation bonds, in terms of section 7(1) of the Wealth-tax Act, 1957. In that sense I would say that the Tribunal was not justified in ignoring the agricultural income-tax outstanding while determining the value of the said asset and the answer to question No. (iii) would to that extent be in favour of the assessee. The question, however, does not stop at that, but asks a further question as to whether in consideration of such a factor, the value of the said asset would be a positive figure or a nil figure. In my opinion, this is a question of fact, which this court cannot answer. What is the value of an asset, in consideration of certain factors, is a question of fact, but whether certain factors are to be considered in determining the value of an asset is a question of law. The answer to question No. (iii) in favour of the assessee has, theref ..... X X X X Extracts X X X X X X X X Extracts X X X X
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