TMI Blog1983 (11) TMI 37X X X X Extracts X X X X X X X X Extracts X X X X ..... owed to carry on business there, with the result that he left behind certain assets which were, under the directions of the Ceylon Government, required to be disposed of and the proceeds realised had to be kept with a Ceylon bank. Though it is not clear from the statement of the case, it appears that the assets were disposed of somewhere in 1968-69 and the amount so realised and deposited in the Chartered Bank of Ceylon in a fixed deposit account, as converted into Indian currency at the official rate of exchange as on the valuation date, was as shown below : Assessment years from 1969-70 to 1973-74 : Assessment year Amount Rs. 1969-70 3,01,215 1970-71 3,06,690 1971-72 2,96,389 1972-73 2,91,464 1973-74 4,57,887 It should be stated for putting the record straight that in the statement of the case, the balance shown for the assessment year 1973-74 is Rs. 4,57,887. But as it appears from the assessment order of the WTO, annexed to the statement of the case, it was Rs. 2,91,464. In the return, the assessee claimed that on account of various restrictions on the operation of the said account, the value of the deposit should be taken under s. 7(1) of the W.T. Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riation of such amount and permitting repatriation, if at all, of the balance amount only after certain deductions would amount to cash so as to entitle the wealth-tax authorities to take the face value thereof for the purpose of computation of the wealth-tax liability of the assessee. Section 3 of the Act is a charging section which provides that subject to the other provisions contained in the Act, there shall be charged for every assessment year commencing on and from the first day of April, 1957, a tax in respect of the net wealth on the corresponding valuation date of every individual, HUF and company at the rate or rates specified in the Schedule. Section 2(m) defines " net wealth " to mean the amount by which the aggregate value computed in accordance with the provisions of the Act of all the assets, wherever located, belonging to the assessee on the valuation date, including assets required to be included in his net wealth as on that date under the Act, is in excess of the aggregate value of all the debts owed by the assessee on the valuation date other than those specified in s. 2(e). Section 4 enumerates as to what assets are to be included in the net wealth of an individ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mplied with before the moneys would be available to the assessee concerned. On behalf of the Revenue it has been contended that the Tribunal had committed an error of law in negativing the contention of the Revenue that the moneys lying in the fixed deposit account are moneys in the bank and, therefore, should be treated, for all intents and purposes, as cash since the fixed deposit account holder can encash the deposit at his pleasure, though there may be certain formalities which he may be required to comply with; or in some cases, he may not be entitled to claim specified rate of interest which the bank had agreed to pay on the maturity of the fixed deposit. The learned counsel for the Revenue contended that the word "cash" occurring in s. 7 is of widest import and the court should not try to restrict its import, since there is no warrant in that behalf. On the other hand, on behalf of the assessee, it has been contended that all the assets which are required to be valued would not be liable to be treated as cash, since that is the very scheme of s. 7 ; and at least in the present case, since the amount lying in the fixed deposit account is in a frozen account and which is not p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eaning of the same or similar word, in other cases, so as to include cases which cannot be reasonably brought within the purview of the language employed. Having regard to the overall context of the provision, we are not inclined to agree with the learned counsel for the Revenue that the word " cash " should be given an extended and enlarged meaning since otherwise it would include all sorts of bank accounts, including bills of exchange, deposits, cheques, bonds, dividend warrants and other securities which can be easily converted into money, Our attention has been invited by the learned counsel for the Revenue to the principle digested in Corpus Juris Secundum, Volume 14. He referred to article I 1, at page 14, in which the word " cash " has been defined. It has been stated that the word " cash " as a noun is generally used to signify money or its equivalent, including coin or specie, and, under certain circumstances, bank notes, drafts, bonds or commercial paper easily convertible into money. It is also true as digested in the said article at page 16 that in popular parlance, " cash " is used to refer not merely to money, but to money in hand, under full control for use in paying ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e generally entitled to be treated as cash. If an asset which may be in the nature of deposits in a bank is subjected to certain restrictive covenants, it has got to be evaluated. An asset which is subjected to encumbrances cannot be evaluated on its face value since the price which such asset would fetch, if sold in the open market, would not be the same; and in order to arrive at a correct valuation of such asset, the only method of evaluating it is to take the valuation of the asset less the valuation of encumbrance thereon. (See CWT v. Smt. Shirinbanoo [1976] 102 ITR 735 (Guj)). Similarly, in a case of leasehold interest in land, the burden or disadvantage attaching to the leasehold interest had to be duly discounted in estimating the price which the leasehold interest would fetch. (See CWT v. Sikand [1977] 107 ITR 922 (SC)). If, therefore, in a given case, certain restrictive conditions are attached to a fixed deposit, account, it would not be possible to evaluate it on its face value. The valuation has to be made according to correct legal principles by reducing the valuation of such asset by deducting the estimated value of disadvantages or restrictions attached to it. If, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sel turns more on the facts of the case particularly the conduct of the testatrix. However, the passage which we have extracted and set out above indicates that in a normal case, the conclusion would be that when the word " cash " is used, it would mean ready money. We are, however, not relying upon this decision for the construction which has appealed to us. We have tried to construe the word " cash " in the context in which it is occurring. In the context of the scheme contained in s. 7, for purposes of valuation and also having regard to the legislative intent as evidenced in the form of return to be made by an assessee for the purpose of computation of wealth-tax under the Act, we are of the opinion that the term " cash " should be construed as " ready money ". It should be emphasised that the Legislature had in its mind a clear distinction between ready money including cash on hand as well as cash in bank, and deposits, debentures, securities and shares which otherwise depending in a given context can be successfully clubbed together under the broad head of cash or money. ln this connection, it is profitable to refer shortly to the form of return of net wealth which an asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... annual instalments of compensation payable for resumption of a Jagir under the Madhya Bharat Abolition of Jagirs Act, 1951, and falling due after valuation date should be included in the net wealth of the Jagirdar for the purpose of assessment to wealth-tax. The Appellate Tribunal had referred two questions for the advice of the court. Question No. 2 was in the following terms. " Whether the market value as on the valuation date of the instalments due to be paid under the provisions of the Madhya Bharat Abolition of Jagirs Act after the valuation date is liable to be included in the total wealth of the assessee ? The Madhya Pradesh High Court, speaking through Dixit C. J. (as he then was), considered the relevant provisions of the Madhya Bharat Abolition of Jagirs Act, 1951, and was of the opinion that the compensation amount became due to the Jagirdar under s. 8(2) of the said Act from the date of resumption, though the compensation amount was made payable not on the date of resumption of jagir, but in maximum 10 annual instalments; and, therefore, a right arose in favour of the assessee to receive compensation on the date of resumption itself ; and since the entire amount wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt from this, the question whether unpaid compensation amount should be considered as cash was not directly in issue before the court. We, therefore, do not think that this decision can be of any assistance to the cause of the Revenue except to the extent of the passing reference observation which has been made that unpaid compensation instalments is a cash asset and, therefore, the question of determining its market value does not arise. In any case, with respect to the learned judges, we do not think that the amount of money which is not readily available can be held to be cash asset. Next decision to which the learned counsel for the Revenue invited our attention is In re Wellsted's Will Trusts: Wellsted v. Hanson [1949] Ch 296; [1949] 1 All ER 577 (CA), where the question was what are the powers of trustees for sale in relation to land under s. 28(1) of the Law of Property Act, 1925, and when the trustees for sale have made investment of the proceeds of sale of land, Whether they can, so long as the proceeds of sale can be traced, apply the realised amount of the investments in the purchase of land ? In that context, Lord Green M.R., in his opinion, observed as under (p. 584) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ning should be ascribed to the word " cash " would depend upon the context, the set up and the collocation of the word and the legislative intent. We do not think that this decision can be of any assistance to the Revenue for the purpose of persuading us to adopt a wider meaning for the word " cash ". Next decision to which the learned counsel for the Revenue invited our attention is that of the Madras High Court in Abdul Rahman v. CWT [1979] 117 ITR 570, where the WTO converted the wealth shown by the assessee which he owned in Ceylon in Ceylon currency into Indian currency at the official rate of exchange and included the amount in the net wealth of the assessee rejecting the claim of the assessee that only the realisable and remittable value of the foreign wealth should be taken instead of adopting the official rate of exchange, and also his further claim that the official rate of exchange was often not realistic and did not represent the real foreign exchange rate and, hence, only a real foreign exchange value should be adopted for the purpose of assessment of wealth. The view of the WTO was confirmed by the AAC as well as by the Tribunal. On a reference, the Madras High Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X
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