Judgment

SABYASACHI MUKHARJI, J.: - This appeal by certificate arises from the decision of the High Court of Andhra Pradesh and it seeks answers to two questions :

"(i) Whether, on the facts and in the circumstances of the case, the properties in respect of which registered sale deeds had not been executed, but consideration had been received, belonged to the assessee for the purpose of inclusion in his net wealth within the meaning of S. 2(m) of the Wealth-tax Act, 1957?

(ii) Whether, on the facts and in the circumstances of the case, the assessees right to receive the sum of Rs. 25 lakhs O. S. from the State Government was an asset for the purposes of inclusion in his net wealth under the Wealth-tax Act, 1957?

2. The year involved in this case is the assessment year 1957-58 under the Wealth-tax Act, 1957 (hereinafter called the Act) It may be mentioned that the valuation date is the first valuation date after coming into operation of the Act which came into force on lst April, 1957. The assessee was the Nizam of Hyderabad, an individual. There were several questions involved in the assessment with all of which the present appeal is not concerned.

3. So far as the first question indicated hereinbefore which was really question No. (ii) in the statement of case before the High Court, it may be mentioned that the Wealth-tax Officer had included a total sum of Rs. 4,90,775/- representing the market value of certain immovable properties in respect of which, although the assessee had received full consideration money, he had not executed any registered sale deeds in favour of the vendees. The Wealth-tax Officer held that the assessee still owned those properties and consequently the value of the same was included in his net wealth.

4. On appeal the Appellate Assistant Commissioner sustained the order with certain deductions in value. On further appeal the Tribunal held that the assessee had ceased to be the owner of the properties. The Tribunal was of the opinion that the assessee having received the consideration money from the purchasers and the purchasers having been put into possession were protected in terms of S. 53A of the Transfer of Property Act and the term owner not only included the legal ownership but also the beneficial ownership. The first question arises in the context of that situation. The High Court following the ratio of Commr. of Income-tax, A. P., Hyderabad v. Nawab Mir Barkat Ali Khan, (1974 Tax LR 90) (infra) answered the question in favour of the revenue.

5. The second question set out before, which was question No. (v) before the High Court, has to be understood in the context of the facts of this case. The right of the assessee to get the amount in question i.e. Rs. 25 lakhs a year arose in the wake of accession of the Hyderabad State to the Union of India. Several communications followed between the Military Governor of Hyderabad, Maj. Gen. Chaudhuri and the Nizam of Hyderabad as well as other officers. It has to be borne in mind that the assessee was a paramount ruler owning certain private properties called Sarf-e-khas. He surrendered his paramountcy and acceded to the Union of India. His private properties were taken over by the Government and it was agreed by the Government that in lieu of his income from the said properties, he would be paid Rs. 25 lakhs in Osmania currency annually.

6. The communication between Major General Chaudhuri, the Military Governor and the Nizam about this particular sum is contained in the letter dated 1st February, 1949. It stated inter alia as follows :

"After this merger H.E.H. will be paid annually a total sum of Rs. 1 crore distributed as follows :-

(a) Rs. 50 lacs as a privy purse.,

(b) Rs. 25 lacs in lieu of his previous income from the Sarf-e-khas,

and

(c) Rs. 25 lacs for the upkeep of, Palaces etc."

7. The letter which appears in the Paper Book of this appeal from Military Governor of Hyderabad, Major General Chaudhuri to the Nizam of Hyderabad, inter alia, states that Nizams