COMMISSIONER OF WEALTH TAX NEW DELHI Vs. P N SIKAND

JUDGEMENT

(1.) This appeal raises a rather difficult but interesting question of law relating to valuation for the purpose of the Wealth Tax Act, 1957 of leasehold interest in land, when there is a covenant in the lease that the lessee shall not be entitled to assign the leasehold interest without obtaining the prior approval in writing of the lessor and the lessor shall be entitled to claim and recover from the lessee a certain specified proportion of the unearned increase in the value of the land at the time of the assignment.

(2.) The controversy in this appeal relates to the assessment year 1968-69, the relevant valuation date being 31st December, 1967. The assessee is assessed to wealth tax as an individual. His net wealth on the valuation date included a property situate on plot No. 12, Block No. 39, Kautilya Marg. Chanakyapuri. The property consisted of leasehold interest in the land together with a house built upon it. The land belonged to the President of India and it was leased by the President of India to one Vashesharan Devi on the terms and conditions set out in an agreement of lease dated 30th December. 1954 and the leasehold interest was acquired from Vashesharan Devi by the assessee. The premium for the grant of the lease was Rs. 24,400/- and the annual rent was fixed at Rupees 610/-, subject to certain variations. The terms and conditions of the lease are a little important and, so far material, they may be reproduced as follows:

(3.) The assessee thereupon applied to the Tribunal for making a reference to the High Court and on the application of the assessee, the following question of law was referred by the Tribunal for the opinion of the High Court: