The right to receive compensation under the Bihar Land Reforms Act constituted an asset within the meaning of Section 2(e) of the Wealth Tax Act and was liable to be included in the assessee's net wealth. The agricultural income-tax outstanding for more than 12 months was deductible as a debt in computing the assessee's net wealth under Section 2(m) of the Wealth Tax Act.

Mahapatra, J.

1. These two references, under Sec.27(1) of the Wealth Tax Act, by the appellate tribunal, Patna, are in relation to assessment years, 1957-58 and 1958-59, in respect of which the two corresponding valuation dates were 31-10-1958, and 31-10-1959 respectively. The assessee is an individual His estate vested in the State of Bihar under the Bihar Land Reforms Act on and from 1-7-1952. He was entitled to receive compensation in that respect from the Government. The manner in which the compensation will be computed as due to an ex-proprietor of an estate has been prescribed in the Act itself. The Wealth Tax Officer included Rs. 10,26,128 in the net wealth of the assessee for determining the wealth tax payable by him as, according to him, that was the amount of compensation due to the assessee from the Government. The basis of that calculation was what the Agricultural Income tax Officer, Arrah, had determined for the year 1359 Fasli to be the assessees zamindari income (Rs. 3,42,041). The Wealth Tax Officer took three times of that as the minimum compensation which the assessee was likely to receive from the Government. Against that the assessee went in appeal before the appellate Assistant Commissioner of Wealth Tax Patna Branch, who, by a consolidated order in both the cases, held that the Wealth Tax Officer was right in including in the appellants assessments for the two years the value of compensation estimated at 10 1/4 lakhs rupees on the two valuation dates. Against that, the assessee came in appeal before the appellate tribunal, which found that the right to receive compensation under the Bihar Land Reforms Act was an asset and its market value was to be estimated as provided under Section 7(1) of the Wealth Tax Act. Both the cases were remanded with a direction that the Wealth Tax Officer should get necessary information and clarification as to the amount of compensation payable to the assessee under Ss. 23 and 24 of the Bihar Land Reforms Act and should also afford every opportunity to the assessee to lead evidence about the probable amount of compensation due to him and thereafter estimate the market value thereof. On this, the assessee asked the tribunal to make a reference to this Court under Sec.27(1) of the Wealth Tax Act, (which will be referred to hereafter as the Act) which was allowed and the following question was framed for reference:

"Whether 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 Sec.2(e) of the Wealth-tax Act and so liable to be included in the assessees net wealth on the two valuation dates relevant for the assessment years 1957-58 and 1958-59."

2. The charging Sec.3 of the Act provides that for every financial year, a 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 shall be charged. The net wealth has been defined in Clause (m) of Sec.2 as meaning the amount by which the aggregate value of all the assets belonging to the assessee on the valuation date is in excess of the aggregate value of all the debts owed by him on that valuation date other than those specified in that clause. To find out what was the aggregate value of all the assets of an assesses it is necessary to determine what is to be taken as an asset for the purpose of this Act Clause (e) of that section stales that "assets" include 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 cultivator 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 receiver of rent or revenue by reason of his connect