Singhal, J. - (1.) THE Tribunal had referred the following question of law arising out of its order dt. 17th Nov., 1983 in respect of the asst. yrs. 1971-72 to 1979-80 under s. 27(1) of the WT Act, 1957 (`the Act'); "Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the rights of the assessee in the land and building constitute an asset within the meaning of s. 2 of cl. (e) of the WT Act, 1957 and, therefore, she is liable to wealth-tax in respect thereto?"
(2.) THE brief facts of the case are that late Shri Raghunath Singh was one of the rulers of Jaisalmer before merger of the said State in Rajasthan. He was given land measuring 3120 sq. Yards in Diplomatic Enclave, New Delhi under an agreement to lease which was registered on 10th May 1963. This plot of land was given in lieu of a house property known as `Jaisalmer House" at Mansingh Road, New Delhi, which was acquired by the Government of India. In accordance with the agreement so entered, the assessee taken over the possession of the plot of land and constructed a building. Necessary approval as contemplated under the original agreement was also taken. THE assessee had the right to use this bungalow for residential purposes and get the lease- deed signed. THE lease-deed was not executed and the said building was not used for the residential purposes for which the land was allotted. THE building was let out to Nigerian Embassy at a rent of Rs. 8,000 per month. Since the building was to be used for the assessee's own residential purposes and had been let out, the lessor; namely, the Government of India considered this manner and condoned this breach subject to payment of certain amounts. The property was constructed by the assessee. The WTO subjected the value of this property to wealth-tax. An objection was taken by the assessee that she had no right, title or interest either in the land or the building and that right, if any, in the land and building did not constitute any `asset' belonging to the assessee within the meaning of s. 2(e), r/w s. 2(m), of the Act. According to the assessee, no asset was acquired by him under the agreement to lease and the creation of asset was possible only when a registered lease-deed was ultimately executed. The superstructure goes along with the land and since the assessee was not the owner of the land, she cannot be considered to be the owner of the building. The right of the assessee was claimed inchoate and precarious which had not ripen into lease-hold right so as to consider the said property as an asset liable to wealth-tax. The WTO was of the view that the assessee had a right to enter the building and use it for residential purposes or to give it on rent after getting approval and, therefore, it is an asset chargeable to wealth-tax. The capitalisation factor was taken as 16 for the asst. yrs. 1967-68 to 1971-72 and 12 for the asst. yrs. 1972-73 to 1974-75 and the property was subjected to wealth-tax. In appeal before the AAC it was found that by agreement dt. 25th April, 1963 the assessee was not permitted to enter the land for the purpose of construction of residential building. A sum of Rs. 50,297 was deposited as security for the due performance of the terms of the agreement. It was under clause-X of the agreement which prohibits without prior consent of the lessor of any sub- interest or sub-letting of the property. The property was given on rent to the Nigerian Embassy without prior permission of the Government. The President of India, however, vide letter dt. 4th July, 1967 granted permission for letting out temporarily up to 14th Jan., 1968 provided the assessee makes the payment of Rs. 16,232 per annum. This permission has, however, been renewed by short intervals by the lessor. The AAC was of the view that the assessee has interest in the property. The assessee was held virtually the owner of the land under the perpetual lease and of the building. So far as the building is concerned, the AAC was of the view that she was the undisputed owner thereof and the agreement to lease in respect of the land was a legally enforceable document. The assessee can press for part performance of the contract for execution of lease-deed in perpetuity as per registered agreement. The said agreement had been duly acted upon and, therefore, the assessee has acquired an asset within the meaning of s. 2(e) and is liable to wealth-tax. It was also found that the assessee has an interest in the property and the contention that the agreement to lease amounted to licence was not found correct. Since the assessee has fulfiled her part of the contractual agreement, viz, construction of the superstructure and letting of such superstructures had been permitted by the lessor, he is legally entitled to enforce specific performance of this part of the contract by the lessor. The lessor is legally bound to execute the perpetual lease-deed in favour of the assessee and the actual restriction is only a question of time. The inaction, deliberate or otherwise, on the part of the assessee by perpetual lease in not executing the deed would not take out such property out of the ambit of the `asset'. In second appeal before the Tribunal, it was found that it is an admitted position that the assessee remained in possession of the building which she constructed, and let out the same on monthly rent and she has been receiving the rent of the said building. The assessee was, therefore, held owner of the building and even the condition that violation of any condition of the agreement would result in forfeiture of the building was condoned by the lessor on payment of certain amounts and the assessee has been allowed to continue in peaceful possession through her tenant. The contention that the assessee has no interest in the building was rejected. In respect of the land it was observed that the absence of registered lease-deed could not be considered a ground that no right has accrued to the assessee. Registered agreement to lease was considered as good as lease-deed. The ownership of the plot of land was not considered relevant, as the plot of land was agreed to be given on lease. The right of enjoyment was transferred to the lessee and as such the right was acquired by her. She remained in peaceful possession of the plot of which she was in peaceful possession and constructed the building thereon. A registered agreement to lease was considered as good as the lease deed because the assessee was put in possession pursuant to the said agreement to lease and constructed the building thereon. The right of enjoyment, thus was acquired. The right of the assessee in the land and building was considered as an asset. Under s. 2(e), `assets' includes property of every description movable or immovable with certain exceptions as provided in the said clause. Sec. 3 creates a charge on the net wealth. Net wealth under s. 2(m) means the amount by which the aggregate value is computed in accordance with the provisions of this Act of all the assets, wherever located, belonging to the assessee on the valuation date, including assets required to be included in his net wealth as on that date under the at. The net wealth, therefore, has to be arrived at by taking the provisions of the Act into consideration and for that purpose the `assets' have to be considered. The definition of `asset' is an inclusive definition and is not an exhaustive one. The only thing to be seen is as to whether the right under agreement to lease is a property so as to constitute an asset in order to find out the interest of the assessee. The Transfer of Property Act, 1882, has defined vested interest and contingent interest under ss. 19 and 21 of the Said Act. Sec. 53A of the transfer Property Act contemplates that where any person contracts the transfer for consideration, any immovable property by writing signed by him or on his behalf from which the terms necessary to constitute the transfer can be ascertained with reasonable certainty, and the transferee has, in part performance of the contract, taken possession of the property or any part thereof or the transferee, being already in possession, continues in possession in part performance of the contract and has done some Act in furtherance of the contract, and the transferee has performed or is willing to perform his part of the contract, then notwithstanding that the contract, though required to be registered, has not been registered, or, where there is an instrument of transfer, that has not been completed in the manner prescribed therefor by the law for the time being in force, the transferor or any person claiming under him shall be debarred from enforcing against the transferee and persons claiming under him any right in respect of the property of which the transferee has taken or continued in possession other than a right expressly provided by the terms of the contract. The leasehold interest in a property is an asset. The agreement to lease has already been entered in to and acted upon. The possession of the property had been given to the assessee. Even the agreement which contemplated a restriction on the right of the assessee to use the property for any purposes other than residential purposes has been relaxed subsequently on payment of certain amounts. The assessee is receiving the rent and no action has been taken by the lessor till date for cancellation of the lease. The building was constructed by the assessee with her own funds. This Court in the case of Saiffuddin vs. CIT (1985) 48 CTR (Raj) 197 : (1985) 156 ITR 127 has held that land can be owned by different persons and building can be owned by different persons. The amount which has been received by the assessee by way of rent is her income and there was part performance of the contract. An agreement for lease was already entered into and got registered. It was only the formal lease-deed which was to be executed in pursuance thereof. Any delay in execution of the said lease-deed would not change the nature of the transaction or right of the assessee as a lease. The construction was made by the assessee of the building on the said plot of land by exercising her right as a lessee and, therefore, she cannot say at any subsequent point of time that she had no right, title or interest in the property.
(3.) THE right to receive compensation was considered to be an asset by the Apex Court in the case of Pandit Laxmi Kant Jha vs. CWT 1973 CTR (SC) 260 : (1973) 90 ITR 97. In this case even the amount of compensation payable was not determined by the Compensation Officer by the valuation date. It was held that the right to receive compensation from the State became vested, the moment the assessee is divested of his estate and the same got vested in the Government. THE matter of determination of compensation was considered to be a matter of calculation. THE right to receive compensation from the State was held a valuable right. THE land which was allotted to the assessee was in lieu of the property acquired and it was a valuable right to the assessee by which the said plot of land was allotted. THE lessor has not claimed any right over the land or the building and impliedly it could have been considered a waiver on its part for exercising such a right on payment of certain charges. THE lessor has already amended the agreement by permitting use of the said property for rental purposes as well and the only thing required to be done was payment of the amount fixed by the lessor. Non-payment of the said amount would not result in abrogation of the right of the assessee. THE lessor has a right to enforce the recovery of said amount and simply because for one reason or the other the said amount has not been paid, it cannot be considered that the assessee has no right in the property or, and that the said property does not constitute an asset. Accordingly, we are of the view that the Tribunal was justified in holding that the rights of the assessee in the land and building constitute her asset within the meaning of s. 2(e) and, therefore, the assessee is liable to pay wealth-tax as a legal heir. Accordingly, the reference is answered in favour of the Revenue and against the assessee. No order as to costs. ;