Rastogi, J. - (1.) AT the instance of the assessee, Sri Bithal Das, an HUF, and as directed by this court, the Income-tax Appellate Tribunal, Allahabad Bench, Allahabad, hereafter referred to as "the Tribunal", has drawn up a statement of the case and referred the following two questions for the opinion of this court: "1. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was justified in holding the taxability of arrears of rent ? 2. Whether, on the facts and in the circumstances of the case, the arrears of rent could legally be included in the total wealth on the basis of accrual when the assessee is following the cash system of accounting ?"
(2.) THE facts stated in brief are that for the assessment years 1969-70 to 1971-72, the assessee had returned its total wealth at Rs. 10,58,100, Rs. 10,58,100 and Rs. 9,48,400, respectively. This did not include arrears of rent in respect of a house property situated at Calcutta and which had been in the tenancy of Smt. Lakhpatia Devi. THE monthly rent of that property was Rs. 600 and the arrears due in respect thereof as on the relevant valuation dates amounted to Rs. 28,000, 36,200 and Rs. 47,600. THE WTO called upon the assessee to explain the reason for not disclosing the aforesaid assets in its total wealth. THE reason given by the assessee was that since the aforesaid dues had become bad and it was doubtful that they would be realized, the assessee had not disclosed them. Apart from that, it was claimed that the assessee was maintaining its accounts on cash basis. THE WTO did not accept this contention and on account of the fact that every year the assessee had been able to recover some of the arrears of rent, held that the arrears of rent had not become irrecoverable or bad debts. Accordingly, he added the aforesaid amounts in the assessments for these years, respectively. THEse three orders were passed on one and the same date, i. e., February 12, 1974. Aggrieved, the assessee preferred appeals before the AAC who disposed of the same by a common order. It was contended before him on behalf of the assessee that since the assessee maintained its accounts on cash basis, the arrears of rent in respect of the house property could not be included in its total wealth for the years under consideration. The AAC did not accept this contention because he found that the assessee had filed a suit for the recovery of arrears of rent and for ejectment and damages in the Court of Small Causes, Calcutta, and the matter is pending in the Calcutta High Court. The assessee had not given up its right or title to those arrears. He distinguished the decision of the Orissa High Court in CWT v. Vysyaraju Badreenarayanamoorthy Raju [1971] 79 ITR 330 and of this court in Sahu Dharmata Saran v. CWT [1971] 80 ITR 194, on the ground that the subject-matter of dispute in those cases represented a debit in regard to business debts. He also observed that the assessee had not produced any balance-sheet before him nor was the same available on record. The disputed debts were outstanding and they were not business debts and, hence, were liable to be included in the total wealth of the assessee. Still aggrieved, the assessee took up the matter in further appeal before the Tribunal. The very same submissions were reiterated on behalf of the assessee before the Tribunal and apart from that it was also contended that the assessee had paid corporation tax in respect of the aforesaid property and the same should have been allowed as deduction before arriving at the market value. The Tribunal did not entertain this contention because it was raised for the first time before it. Further, the Tribunal confirmed the findings of the authorities below that the arrears of rent had not become bad or irrecoverable debts and the fact that the assessee was following the cash system of accounting for wealth-tax purposes would have no effect. However, it agreed with the assessee that the entire amount of arrears of rent could not be included in the total wealth of the assessee for these years. Keeping in view that a litigation was going on and it was doubtful as to when and to what extent the assessee would realise the arrears, the entire amount could not be treated as the wealth of the assessee. Only the market value of such assets could be included, and, in the opinion of the Tribunal, it would be fair and reasonable to estimate the same at 60 per cent, for each of these years. To that extent, therefore, relief was allowed to the assessee. Now, at the instance of the assessee the questions mentioned above have been referred to this court.
(3.) IT was submitted before us on behalf of the assessee by its learned counsel, Sri R. K. Gulati, that in view of the admitted fact that the assessee maintains its accounts on cash basis, the arrears of rent could not be included in its total wealth on the basis of accrual, it would not be necessary to enter into question No. 1 and reliance was placed on the decision of the Orissa High Court in the case of Vysyaraju [1971] 79 ITR 330 and that of the Karnataka High Court in A. T. Mirji v. CWT [1980] 126 ITR 93. We do not agree because we have first to examine the nature of the arrears of rent and then to see as to whether they can be included in the total wealth of the assessee. IT is, of course, not disputed that the assessee maintains its accounts on cash basis but, at the same time, as observed by the AAC, the assessee did not produce any balance-sheet before him nor any balance-sheet was available on the record. IT is also not in dispute that the assessee had filed a suit for the ejectment of the (tenant, recovery of rent and mesne profits in respect of this property in the 10th Court of the Subordinate Judge, Alipore. That suit was decreed on December 1, 1967, for recovery of possession, for recovery of Rs. 80 as arrears of rent and mesne profits at the rate of Rs. 600 per month from December 5, 1965, till the recovery of possession. The amount of mesne profits was to be determined in subsequent proceedings on an application filed by the plaintiffs on payment of proper court fee. A copy of this judgment has been filed with an affidavit before this court. The matter is now pending in appeal before the Calcutta High Court. Section 3 of the W.T. Act, hereafter referred to as "the Act", is the charging section. It provides that for every assessment year commencing on and from the first day of April, 1957, wealth-tax is leviable in respect of the net wealth of an individual, Hindu undivided family and company as on the corresponding valuation date. Section 4 provides as to what are the assets which should be considered as belonging to an individual. "Net wealth" has been defined in Section 2(m) to mean the amount which represents the aggregate value of the assets of the assessee on the valuation date after deducting the aggregate value of all the debts owed by him on the valuation date other than the debts and liabilities specified in the Act. Section 2(e) defines the expression "assets" to include property of every description, movable or immovable, but does not include certain categories of properties with which we are not concerned. The meaning of the word "property" has not been defined in the Act. As held by the Supreme Court in J. K. Trust v. CIT [1957] 32 ITR 535, "property" is a term of the widest import, and subject to any limitation or qualification which the context might require, it signifies every possible interest which a person can acquire, hold and enjoy. The question for consideration in that case was whether for the purposes of Section 4(3)(i) of the Indian I.T. Act, 1922, the office of managing agency, which was an office of profit, was "property" which could be held on trust, and it was held that the managing agency of a company is business and is "property" for the purposes of Section 4(3)(i). It was observed that there was nothing in Section 4(3)(i) of the Indian I.T. Act, 1922, which restricted in any manner the normal and accepted meaning of the word "property" and excluded business from its connotation. It has, thus, been laid down that the word "property" in its normal and accepted meaning is a term of the widest import and unless there is any limitation or qualification placed contextually, it would signify every possible interest which a person can acquire, hold and enjoy. This proposition was reiterated by the court in Ahmed G.H. Ariff v. CWT [1970] 76 ITR 471 (SC) and at p. 476 of the report it has been further said : "the meaning of the word 'property' has come up for examination before this court in a number of cases". It was observed in Commissioner, Hindu Religious Endowments v. Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt [1954] SCR 1005, that "there was no reason why that word should not be given a liberal and wide connotation and should not be extended to those well-recognised types of interests which had the insignia or characteristic of proprietary right".;