Decided on August 08,1967



P.V.DIXIT,C.J. - (1.) THIS is a reference under S. 27(1) of the WT Act, 1957, at the instance of the assessee, Seth Narsinghdas Kanhaiyalal of Jabalpur. The Tribunal has posed before us the following questions : "Whether, on the facts and in the circumstances of the case, (a) the value of the properties left by the assessee's mother and which properties were given to her under the registered partition deed, dt. 3rd Oct. 1955, executed by and between the members of the assessee HUF ; and (b) the amount of Rs. 1,56,471 received by the assessee from the Government in part payment of the compensation in respect of the land and properties acquired by the Government, have been rightly included in the net wealth of the assessee ?"
(2.) THE material facts are that at the time of the partition effected between the assessee, his wife and his two sons by a registered deed dt. the 3rd Oct., 1955, Smt. Ramkunwarbai, the assessee's mother, was given onethousand shares of the Perfect Potteries Co. Ltd., Jabalpur, and some land situated in Mankhedi, Tehsil Patan, District Jabalpur, for her maintenance. The material portion of the partition deed dealing with this matter ran as follows : "I am a Marwadi Vaish following Vallabh Kul Sanuday Principles. I am governed by the Mitakshara Act which is applicable to Hindus of our community. Hence I am responsible for looking after my mother alone during her lifetime about which I have always been vigilant. Therefore, I have transferred 1,000 preference shares of the Perfect Pottery Co. Ltd., Jabalpur, in her name at the time of partition of the movable property with her consent and now by virtue of this agreement I further give her the land measuring 102.39 acres in village Mankhedi, Tehsil Patan, District Jabalpur, the yearly rent of which is Rs. 150. She may utilise income of these properties given to her for her maintenance during her lifetime or may give away for the religious cause as she may desire. During her lifetime no co - sharers will have any kind of right or connection whatsoever on these properties given to her by me. I feel these properties given to my respected mother is reasonable according to the standard of living and dignity of our family and I am confident no co - sharer will have any sort of objection in this regard." The value of these one thousand shares used to be included in the computation of net wealth of Smt. Ramkunwarbai for purposes of wealth -tax assessment. After her death on 20th Oct., 1960, the WTO included the value of these shares in the net wealth of the assessee, Seth Narsinghdas Kanhaiyalal, for assessment of wealth -tax in respect of the asst. year 1962 -63, the valuation date being 27th July, 1961. The WTO rejected the contention of the assessee that the properties which were given to Smt. Ramkunwarbai at the time of partition, having been given to her only for the purposes of her maintenance, reverted back to the defunct HUF of the assessee, his wife and sons, and not to the assessee, Seth Narsinghdas, in his individual capacity, and, therefore, the value of the shares could not be included in the net wealth of the assessee. The contention was rejected by the AAC and the Tribunal also, in the appeals preferred by the assessee.
(3.) IN 1942, certain properties belonging to the assessee were first requisitioned by the Government. They were later on acquired in 1956, under the Requisitioning and Acquisition of Immovable Property Act, 1952, and the Rules framed thereunder. The assessee made a claim that as he was the owner of the property the Government should pay him compensation of Rs. 13,62,536 in respect of the property acquired. By an agreement dated the 4th July, 1960, concluded between the assessee and the Government, the assessee was paid Rs. 1,56,471 "as compensation for the said property pending agreement as to, or determination of, the amount payable as compensation to the owner." The amount was received by the assessee in July, 1960. Clause 3 of this agreement provides that : "If it hereafter transpires that the owner is not entitled or exclusively entitled to the compensation payable in respect of the said property, or if the Government has to pay any compensation to any other person the owner shall refund to the Government the payments made hereunder and shall otherwise indemnify the Government against any loss or damage suffered by the Government by reason of any fault or defect in his title as represented by him without prejudice to any other remedies for the enforcement of any refund and indemnity, the Government may recover any sum payable by way of refund and indemnity as arrears of land revenue." ;

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