WEALTH TAX OFFICER Vs. KOMMURI APPADU DORA
INCOME TAX APPELLATE TRIBUNAL
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George Cheriyan, Accountant Member -
(1.) THESE appeals arise out of wealth-tax proceedings and relate to the assessment years 1970-71 to 1974-75. The appeals have been preferred by the revenue and as common contentions are involved, we proceed to dispose of the appeals by this common order.
(2.) The assessee, a HUF, owned wet lands to the extent of 57.52 acres and dry lands to the extent of 92.12 acres. Most of these lands were tenanted. The assessee had put forth the plea at the time of assessments that portions of these agricultural lands had been transferred. The WTO held that as the transfer of property was not registered and even the entire sale proceeds had not been received by the assessee, the transfers were not complete and the assessee continued to be the legal owner of the properly. The assessee had sought for exclusion of 3 acres of wet land and 0.5 acres of dry land in relation to the assessment year 1970-71, and for the subsequent years exclusion was sought of the value of 41.72 acres of wet land and 73.49 acres of dry land. What the WTO did was to include the value of lands themselves, which were said to have been transferred, in the assessee's net wealth on the ground that the assessee continued to be the owner thereof and he deducted therefrom amounts received by way of advance which was Rs. 3,000 for the assessment year 1970-71, Rs. 1,03,600 for the assessment year 1971-72 and amounts on similar basis in the subsequent years. The assessee appealed and contended before the AAC that the value of the lands in respect of which persons had been put in possession and part consideration obtained should be totally excluded. The AAC took the view, following the decision of the Andhra Pradesh High Court in V. Sankaraiah v. Land Reform Tribunal AIR 1976 SC 58, that the transfers were valid in law and the assessee was no longer the owner of the land and, therefore, the value of the land should be excluded in computing the net wealth of the assessee. He, therefore, directed the exclusion of the value of the lands. But, at the same time, he stated that the amounts receivable under the documents as well as received earlier should be taken into consideration.
The revenue is aggrieved with the decision of the AAC. The learned departmental representative submitted that the assessee continued to be the legal owner of the land till such time as the documents in question were registered. The second proposition he sought to make was that even if an asset was inalienable, it was settled law that it was property and looking to the judgment of the Supreme Court in Purshottam N. Atnarsay v. CWT 88 ITR 417, even where property was incapable of being sold, the interest of the owner had to be valued. Thus, he submitted that the lands were rightly valued by the WTO and the AAC was in error in directing exclusion of the values.
(3.) THE learned counsel for the assessee, on the other hand, submitted that even if the legal title remained with the assessee, it was only a husk which had no value and the lands really belonged to the persons in whose favour documents were executed (hereinafter referred solely for the sake of convenience as "transferees")- According to him, the lands belonged to the transferees only and the land ceased to belong to the assessee, looking to the ratio of the judgments of the Andhra Pradesh High Court in Authorised Officer v. Kalyanam China Venkata Narasayya  1 APLJ 98 and in Mutha Reddy Venkataratnam Chowdhry v. State of Andhra Pradesh  1 APLJ 44. THE learned counsel submitted that it is the real owner alone who could be taxed for wealth-tax purposes and not the ostensible owner and in this regard, reference was made to the decision in CWT v. Smt. H.H. Rajkuverba  86 ITR 783 (Mys.). He stressed that after execution of documents and putting the transferee in possession, even though the full consideration was not paid and only part consideration was received, the assessee did not have the right to recover the. property if balance of consideration was not paid, but only had the right to sue for the balance of consideration and to have a charge on the property to the extent the balance was not paid. Finally, the learned counsel submitted that since what was valued was the land itself, and that alone was subject-matter of appeal, it was not open to us to value the title which remained with the assessee which would be a different asset even were we to hold that such title had a value. THE learned departmental representative in reply relied on the decision of the Andhra Pradesh High Court in CIT v. Nawab Mir Barkat All Khan 1974 Tax LR 90, to canvass the proposition that as long as a registered document was not executed, even if full consideration had been received, a transferor would continue to be the owner of the property and that in India there was no distinction between legal ownership and beneficial ownership. While this was a decision given in income-tax proceedings, the learned departmental representative submitted that in wealth-tax assessment also it was held that the value of properties was inaudible by the decision in CWT v. Late Nawab Sri Mir Osman All Khan Bahadur 1974 Tax LR 367 (AP). In reply, the learned counsel for the assessee submitted that the judgments of the Andhra Pradesh High Court relied on by the learned departmental representative had not noticed the judgment of the Supreme Court in the case of R.B. Jodhamal Kuthiala v. CIT  82 ITR 570 and that the Punjab and Haryana High Court in the case of Smt. Kalarani v. CIT  130 ITR 321 had referred to this aspect in differing from the judgment of the Andhra Pradesh High Court. THE learned counsel went on to state that where there was a conflict between the ratio of the judgment of the Supreme Court and that of the High Court, the ratio enunciated by the Supreme Court alone had to prevail. In R.B. Jodhamal Kuthiala's case (supra), he submitted, the Supreme Court had laid down that the word "owner" had different meanings in different contexts and viewed from that angle, he submitted, in the present case, the value of the properties which were stated to have been put in possession of the transferees under various documents, could not be included in the hands of the assessee.;
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