(1.) THE matter arises under the WT Act, 1957, for short 'the Act'. The assessee under the Act is the appellant. He was a partner in a firm styled as M/s Varkey Jacob and Co., which took on lease the estate styled as Velanikkara Thattil Estate to the extent of l/3rd share in the said estate. The said estate belonged to the mother of the appellant. The State Government acquired the estate in the year 1970 and the possession was taken over by Government in 1973. The business of the firm M/s Varkey Jacob and Co. came to an end with the acquisition of the said estate. In the present case, we are concerned with the assessment of the appellant under the Act for the year 1986 -87. The appellant filed a return of wealth for the asst. yr. 1986 -87 on 23rd Oct., 1990. In the said return, the assessee had shown the value of right to receive enhanced compensation and interest in respect of appellant's right on the acquired property at Rs. 10,82,015. Later, the assessee filed a revised return in which the right to receive enhanced compensation and interest was shown only at Rs. 3,31,758. Here, it is relevant to note that in the appeals filed by the State, and cross -objection filed by the appellant and others, this Court has determined the compensation as also the interest payable in respect of the acquisition of the estate by judgment dt. 28th Jan., 1987. The appellant in the return filed on 23rd Oct., 1990, had adopted 50 per cent of the compensation amount and 50 per cent of the interest awarded by the High Court in the said judgment, as the value of the right to receive enhanced compensation and interest. However, the AO completed the assessment as per order dt. 25th March, 1991 (Annexure -A), by evaluating the right to receive compensation and interest at Rs. 19,65,628 which is made up of Rs. 3,85,550 representing 90 per cent of the enhanced compensation and Rs. 15,80,078 representing 90 per cent of the accrued interest as per the judgment of the High Court. The appellant, being aggrieved by the said judgment, filed appeal before the CIT(A), who by his order dt. 23rd Sept., 1998, upheld the adoption of the interest based on the decision of the High Court. In further appeal by the assessee, the Tribunal confirmed the order of the two authorities holding that since the assessee had filed the return on 23rd Oct., 1990, that is much after the decision of the High Court rendered on January, 1987, there was no risk factor as claimed by the assesses to offer only 50 per cent of the enhanced compensation and interest thereon at 15 per cent. It is against the order of the Tribunal, the assessee is in appeal.
(2.) SRI . N. Sreenivasan, senior counsel appearing for the appellant, submits that the relevant date for valuation of the assets is the valuation date in respect of the concerned assessment year, that on the valuation date, the only decision that was available was the decision of the sub -Court which has awarded interest at 4 per cent, apart from the compensation fixed and that the said award was also subject to appeal by the Department and by the assessee before this Court. The senior counsel, therefore, submitted that in view of this nebulous situation, particularly in view of the fact that the very question of entitlement of interest under the Land Acquisition Amendment Act, 1984, was doubtful, and at any rate discretionary, the assessee was not obliged to estimate the right to receive interest at 15 per cent as provided under the Amendment Act, and, therefore, the assessee had estimated the right to receive interest only at 4 per cent as awarded by the sub -Court and written the same in the revised return filed for this year. The senior counsel also took us to the provisions of Section 3 of the Act and also to Section 2(m) of the Act defining 'Net wealth'. The senior counsel further submitted that at any rate, the Tribunal should have accepted the contention of the assessee that in the nubulous situation obtained as on the valuation date, the offer of 50 per cent of the interest awarded by the High Court should have been accepted.
Sri P.K.R. Menon, senior Central Government standing counsel for Taxes, appearing for the respondent, submits that in the instant case, the appellant had filed the return for the asst. yr. 1986 -87 only after the judgment of the High Court in the Land Acquisition Appeals filed by the Department and by the assessee, that in the said judgment, this Court has awarded interest at the rate of 15 per cent on the compensation as provided under the Land Acquisition Amendment Act, 1984, and, therefore, the stand of the appellant that the correct figure was not available as on the valuation date was not justified. The senior counsel also submitted that the AO has adopted only 90 per cent of the interest awarded by this Court as representing the right to receive interest. The senior counsel further submits that both the appellate authorities have rightly upheld the order of the AO.
(3.) WE have considered the rival submissions. The assessment year concerned is 1986 -87. The relevant valuation date is 31st March, 1986. As on that date, there was only the award of the sub -Court in which only 4 per cent interest was awarded on the compensation amount. The decision of the High Court in the appeal was rendered only on 28th Jan., 1987, after the valuation date. Section 3 which is the charging section, Sub -section (1) thereof reads as follows :
'3. Charge of wealth -tax (1) Subject to the other provisions (including provisions for the levy of additional wealth -tax) contained in this Act, there shall be charged for every assessment year commencing on and from the first day of April, 1967 (but before the first day of April, 1993), a tax (hereinafter referred to as wealth -tax) in respect of the net wealth on the corresponding valuation date of every individual, HUF and company at the rate or rates specified in Schedule I.' ;