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1984 Supreme(SC) 50
SUPREME COURT OF INDIA
V.D. TULZAPURKAR AND SABYASACHI MUKHARJI, JJ.
Commissioner of Wealth-tax, Patna,
Versus
Raghubar Narain Singh, Respondent.
Civil Appeals Nos. 1233-1237 of 1973.
Decided on 20-2-1984.
Advocates appeared
Mr. G. C. Sharma, Sr. Advocate, Mr. B. B. Ahuja and Miss. A. Subhashini, Advocates with him, for Appellant; Mr. P. K. Chatterjee, Sr. Advocate, Mr. Rathin Dass, Advocate with him, for Respondent.
* Tax Cases Nos. 64 to 68 of 1967, d/- 5-5-1972 (Pat.)
A.Subhashini, B.B.Ahuja, G.C.Sharma, P.K.CHATTERJI, RATHIN DAS
Headnote:
Wealth Tax Act, 1957 - Section 7 - Bihar Land Reforms Act, 1950 - Wealth tax - Assessments - Amounts of money due - Decreed - Assessee had obtained Civil Court decree against decrees are still pending in execution - In books of assessee these two decretal amounts were shown as still outstanding - So far as decree obtained against position seems to be that Tulsi owed a decree to assesse and assessee owed money to bank - In connection with decree obtained against it had been contended before Tribunal that at instance of Official Liquidator, Calcutta High Court had issued a order on for setting off assesees liability to Pacific Bank and, therefore, decree did not represent wealth which could be valued under Ac - Decree against attachment order passed by Calcutta High Court was on, that is to say even after valuation date for assessment year - Whether in facts and circumstances of case, decrees obtained by assessee against and respectively, have been valued under Wealth Tax Act, 1957, by correctly applying provisions of Section 7 of the Act for purpose of including their values in net wealth of the assessee - Whether the sum amount of agricultural income-tax due from the assessee, falls for deduction in hands assessee in arriving at his total wealth for years ?- Whether sums of Rs. 5,97,909 due under claim decrees obtained against them by assessee under Bihar Land Reforms Act are assets of assessee within meaning of Wealth Tax Act, 1957, and have been valued under said Act by correctly applying the provisions of Section 7 of Act for purpose of including their values in net wealth of assessee?" – Held, High Court held and in Court opinion rightly that two decrees had not been valued under Section 7 (2) of Act at all and had been valued –High Court directed that when assesses had a claim decree against its debtor, Wealth Tax Officer should ascertain price that a reasonable person would have paid for it on relevant date, valuation in open market considering that this claim decree can only be satisfied, wholly or partly from compensation which debtor would receive under Bihar Land Reforms Act, 1950 - Claim decree was an asset, High Court held, but it was wrongly valued by authorities and directed to be valued by estimating what it would fetch in the open market on valuation date taking into consideration all hazards - There cannot be any dispute - Regarding Proporition No. (4), it may be stated that while it is a question of fact but if Tribunal has arrived at conclusion by taking wrong principles into consideration then such a finding would not bind High Court - Regarding Proposition No. (5), it may be stated that debts may be deducted from value of assets but valuation of an asset has to be done in terms of Section 7 (1) taking into consideration all hazards including possibility of an amount on account of debt being deducted from value of the asset is a factor which will influence a prospective buyer in the. open market. depending upon facts and circumstances of each case - Appeals dismissed.
JUDGMENT
SABYASACHI MUKHARJI, J. :— These appeals from the judgment of the High Court of Patna have come to this Court by certificates granted under Section 29 of the Wealth Tax Act, 1957. The questions upon which the certificates of fitness of appeal to this Court have been granted are questions Nos. (2). (3) and (4) in Tax Cases Nos. 64 to 68 of 1967. The questions are as follows:
"Question No. 2.-Whether in the facts and circumstances of the case, the decrees obtained by the assessee against Shri A. H. Lal and Shri D. D. Tulsi for Rs. 1,11,747 and Rs. 51,525 respectively, have been valued under the Wealth Tax Act, 1957, by correctly applying the provisions of Section 7 of the Act for the purpose of including their values in the net wealth of the assessee
Question No. 3.- Whether the sum of Rs. 32,266, the amount of agricultural income-tax due from the assessee, falls for deduction in hands of the assessee in arriving at his total wealth for the years 1957-58, 1958-59, 1959-60 and 1960-61?
Question No. 3.- Whether the sums of Rs. 5,97,909 due from Tikait Girja Prasad Sinah. Rs. 40,001 due from Sri Ganaeshwar Prasad Singh, Rs. 64,000 due from Mahanth Mahabir Das, Rupees 39,773 due from Sri Lakshmi Narain Singh, Rs. 2600 due from Sri Jamuna Prasad Missir, Rs. 1250 due from Sri Sariua Kumar, Rs. 15,344 due from Sri Nandkishore Singh, and Rs. 3,88,760 due from Raia Prithvichand Lal Chaughury under claim decrees obtained against them by the assessee under the Bihar Land Reforms Act are assets of the assessee within the meaning of Wealth Tax Act, 1957, and have been valued under the said Act by correctly applying the provisions of Section 7 of the Act for the purpose of including their values in the net wealth of the assessee?"
2. Regarding Question No. 3 which is the question whether, the amount of agricultural income-tax dues from the assesses is a factor which has to be taken into account for valuing the compensation payable to the assessee. We have held that agricultural income-tax dues from the assesses which are deductible from the compensation under Sec. 4 (c) of the Bihar Land Reforms Act, 1950, if the same has not been deducted before the issue of the compensation bond, then the possibility and the hazard of its being deducted from the compensation involved is a factor which has to be taken into account in estimating the value of the right of compensation for the purpose of estimating the net wealth of the assessee on the valuation date under the Wealth Tax Act. The arrears of agricultural income-tax is not to be deducted from the net wealth as such but is a factor which willing purchaser will take into consideration in estimating the value of these assets and that is a factor which should be taken into consideration. The point has been discussed by this Court in the case of Commissioner of Wealth Tax, Bihar. Patna v. Kumar Kamal Singh (Civil Appeals Nos. 1238 to 1240 (NT) of 1973) is, Therefore, answered as the answer given in the said appeals and the Tribunal will estimate the value by taking into consideration the possibility for deduction on account of the liability of the assessee on account of agricultural income-tax if it had not been already deduced in accordance with the provisions of the Act and determine the net value of the assets of the assesses, accordingly.
3. These questions are for the wealth tax assessments of the assessee for the assessment years 1957-58, 1958-59, 1959-60, 1960-61 and 1961-62. The assessments involved were for those years in which the relevant valuation dates were 20th September, 1956, 21st March 1958, 21st March, 1959, 21st March, 1960 and 20th March, 1961 respectively. In the first year the assessee had filed return of wealth for Rs. 4,47,065-00. The Wealth Tax Officer, however, determined the total wealth of the assesses at Rupees 16,08,863-00. The Wealth Tax Officer included in the net wealth of the assessee, various amounts of money due under decrees which the, assessee had obtained a
