TMI Blog1980 (2) TMI 43X X X X Extracts X X X X X X X X Extracts X X X X ..... ts and circumstances of the case, whether the right of the assessee to receive 10 candies of arecanut per year as owelty is entitled to exemption under section 5(1)(iva) of the Wealth-tax Act, 1957 ? " The material facts are not in dispute. The assessee was a member of a joint family and a partition was effected among the members which is evidenced by a deed of partition dated 24th July, 1968. The assessee was the 8th party to the deed. It transpires that for equalisation of shares certain adjustments had to be made by way of periodical payments of agricultural produce, namely, areca. The assessee was to get 2 candies of areca on May 31, 1969, and 2 1/2 candies of areca on May 31, 1970, and thereafter every year by the 31st of May at the rate of 2 1/2 candies of areca from sharer No. 7. Similarly, from sharer No. 5 he was to get 6 1/2 candies of areca and 650 coconuts on or before the 31st May, 1969, and 7 1/3 candies of areca and 1,000 coconuts on or before 31st of May, 1970, and thereafter every year by the 31st of May. Some of the sharers including the assessee were to pay on or before 31st of May every year 14 1/2 maunds of areca to sharer No. 1, who was the father of the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lue." Before the AAC (in relation to the first two assessment years), it was contended that the rectification made by the WTO was untenable. But, the AAC observed that the WTO had in the first instance taken the appellant's right to receive certain agricultural produce as agricultural wealth and this was patently erroneous and, therefore, the rectification proceedings were justified. He observed that the assessee's right to receive a certain thing whether it was movable or immovable, was only movable property and there could be no two opinions about that. In the further appeals before the Tribunal for all the three years, the contention was that the assessee was entitled to the exemption as provided in s. 5(1)(iva) of the Act. The contention was that the right of the assessee to receive 10 candies of arecanut was a provision for owelty and the said right is the same as the right to the agricultural land yielding a similar income. It appears that there was also a contention raised that the said right amounted to a right to an annuity. The Tribunal negatived the contention that the right amounted to a right to an annuity and even assuming that it was an annuity, as under the terms ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and not entry 86, List I or entry 49 of List II of the Seventh Schedule of the Constitution. The argument was that the Supreme Court's decision was based on the premise that the tax was not a tax on land as such but on an interest resulting, in wealth which could include both agricultural land and other property. The argument of the learned counsel is that the expression " agricultural land " in s. 5(1)(iva) of the Act must be interpreted as an interest in the agricultural land and the exemption granted. The recitals in the document which we have referred to earlier are clear. The assessee was allotted certain area of agricultural land, but as the property allotted to him was deficient to some extent and the shares had to be equalised, a further provision was made by way of payment of arecanut annually. This itself shows that the assessee could not claim any interest in the land as appertaining to this payment, as the payment would be in lieu of actual allotment of land as such. But the document has made the matter quite explicit. It has provided that the allotment of properties is final and binding upon the parties and no one sharer had any right to claim even an exchange of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... realise a sum of money to be paid to the chargee. Such a right to enforce payment by proceeding against the property cannot be construed as a right inhering in that person in the immovable property itself or leading to a conclusion, that the property or any interest therein belongs to him. The Supreme Court in the case of J. K. (Bombay) (P.) Ltd. v. New Kaiser-I-Hind Spg. and Wvg Co. Ltd. [1970] 40 Comp Cas 689 (SC) explained the distinction between a charge and mortgage. It was oberved thus (at p. 708) : " The distinction between a charge and a mortgage is clear. While in the case of a charge there is no transfer of property or any interest therein, but only the creation of a right of payment out of the specified property, a mortgage effectuates transfer of property or an interest therein." Therefore, the submission that the assessee acquired an interest in any immovable property on account of the provision for owelty cannot be accepted as correct. Learned counsel for the petitioner also relied upon a decision in CED v. Estate of late Sethuraman Pillai [1980] 121 ITR 172 (Mad), where a right to receive rent had been held to be an interest in property passing on the death ..... X X X X Extracts X X X X X X X X Extracts X X X X
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