COMMISSIONER OF WEALTH TAX vs KARANBIR SINGH (HUF)

G.S. SINGHVI, J.

These petitions are being disposed Of by a common order because the question of which reference has been sought by the petitioner u/s 27(3) of the Wealth Tax Act, 1957, is identical in both the cases.

The facts necessary for deciding whether or not the reference sought by the Revenue should be granted are that in the WT returns filed by the assessee in the status of HUF, the net wealth was declared at Rs. 6,02,300 for the assessment year 1987-88 W.T.C. No. 4 of 1996) and at Rs. 5,82,000 for the assessment year 1988-89 (W.T.C. No. 3 of 1996). During the course of assessment proceedings, it was noted that the assessee had received enhanced compensation and interest amounting to Rs. 23,10,000 in May, 1986, in respect of agricultural land acquired for the Punjab State Electricity Board in 1962.

The assessing officer included that amount in the net wealth for the assessment years under consideration. The appeals filed by the assessee were dismissed by the CWT(A) but his second appeals were allowed by the Tribunal on the ground that the enhanced compensation could not be included in the net wealth of the assessee because it was being disputed by the State.

We have heard Shri S.S. Mahajan and Shri A.K. Mittal and have gone through the records. Admittedly, the enhanced compensation was received by the assessee in May, 1986, i.e. after expiry of the valuation date in respect of the assessment year 1986-87. It is also an admitted fact that the enhanced compensation together with interest had been received by the assessee without any condition. Therefore, the mere pendency of appeal filed by the State against the award of enhanced compensation could not, in our opinion, be made basis by the Tribunal for holding that the amount of enhanced compensation was not includible in the net wealth of the assessee. In our opinion, the question of which reference has been sought by the Revenue requires consideration by the Court. Hence, we allow these petitions and direct the Tribunal to make reference of the following question of law to this Court; -

"Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the amount of enhanced compensation* and interest thereon received in May, 1986 in consequence of the judgment of District Judge and the amount having been utilisedlinvested in the discretion of the assessee was not includible in the net wealth of the assessee ?"

The Tribunal is directed to draw up a statements of the cases and refer the aforementioned question to this Court. We also direct the Tribunal to remit the record of the case to the High Court.