Decided on September 23,1966

U.S. NAYAK Appellant


- (1.)THE assessee purchased in 1955 a house property at Malleswaram in Bangalore, from the widow of one Rajawade for a sum of Rs. 25,000. This consisted of one bungalow and three out-houses, measuring in all 3,500 sq. yards. THE property is mutated in the assessee's name in the municipal register. THE assessee could not take possession of the property as the occupant, claiming herself to be the second wife of Rajawade, questioned the sale of property by the first wife. THE assessee could not realise any rent from the person ocupying the properties. When the wanted to evict the tenants, a suit was filed in the District Court. THE assessee contested it and it was decided in assessee's favour on January 30, 1962. An appeal has been filed in the High Court by the other party.
(2.)IN the wealth-tax return for the valuation date of March 31, 1961, the assessee showed a sum of Rs. 25,000 as advanace against the purchase of this property.
The Wealth-tax Officer considered that the value of the property should be taken at its fair market value and that what had been shown in the wealth-tax return was below the market value. He referred to the locality in which the property was situated and the circumstances that even vacant sites were selling at more than Rs. 15 per sq yard. He called upon the assessee to furnish details of the extent of the vacant sites, etc.

The assessee pleaded his inability to do so. It was represented that he was not receiving any rent or any benefit from this property even though he was the legal owner, and that the sum of Rs. 25,000 should have been treated as an advance against the house prorperty.

(3.)THE Wealth-tax Officer did not accept the contention of the assessee. He put the market value of the property at Rs. 70,000. A copy of the assessment order is annexure "A", and forms part of the case.
The assessee appealed to the Appellate Assistant Commissioner against this order of the Wealth-tax Officer. A Appellate Assistant Commissioner considered that there were two aspects to the question, one legal and the other factual; that viewed as a question of law, it was evident that the legal title could been considered to be absolute and final only in case it had been derived from a party who had a valid title to sell the property and that though the District Court had decided in favour of the assessee, the matter was being taken to the High Court and, therefore, it was sub judice. In dealing with the other aspect, he observed that it was admitted fact that since the purchase in 1955, the assessee had not been able to exercise any of the attributes of ownership over this property and that the legal ownership was conditioned and almost rendered nugatory by the dispute as to the title which was sub judice and that the inescapable fact was that the property was in possession of the objecting party. He considered that the amount of Rs. 25,000 was to be treated as an advance and the value of the building should be restricted to that figure. A copy of the Appellate Assistant Commissioner's order is annexure "B" and forms part of the case.

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