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U.S. Nayak Vs. Commissioner of Wealth-tax, Mysore - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtKarnataka High Court
Decided On
Case NumberT.R.C. No. 10 of 1965
Judge
Reported in[1968]68ITR171(KAR); [1968]68ITR171(Karn)
ActsWealth Tax Act, 1957 - Sections 7(1) and 27(1)
AppellantU.S. Nayak
RespondentCommissioner of Wealth-tax, Mysore
Appellant AdvocateS.P. Bhat, Adv.
Respondent AdvocateG.R. Ethirajulu Naidu, Adv.
Excerpt:
- labour & services. dismissal from service: [subhash b adi, j] articles of charges against the respondent regarding obtaining employment by producing false transfer certificate enquiry report finding of disciplinary authority that the charges is proved order of dismissal-challenge to delay in completing the enquiry proceedings reinstatement without back wages pleaded against held, a person, who practices fraud for achieving his object, cannot perpetuate much less on the ground of delay. even one acquires certain rights, they get vitiated once it is proved that the acquisition by means of fraud. the allegation of fraud having been proved, there is no justification for the labour court to set aside the punishment. further, the gravity of the charge cannot be ignored,.....1. the assessee purchased in 1955 a house property at malleswaram in bangalore, from the widow of one rajawade for a sum of rs. 25,000. this consisted of one bungalow and three out-houses, measuring in all 3,500 sq. yards. the property is mutated in the assessee's name in the municipal register. the assessee could not take possession of the property as the occupant, claiming herself to be the second wife of rajawade, questioned the sale of property by the first wife. the assessee could not realise any rent from the person occupying the properties. when the wanted to evict the tenants, a suit was filed in the district court. the assessee contested it and it was decided in assessee's favour on january 30, 1962. an appeal has been filed in the high court by the other party. 2. in the.....
Judgment:

1. The assessee purchased in 1955 a house property at Malleswaram in Bangalore, from the widow of one Rajawade for a sum of Rs. 25,000. This consisted of one bungalow and three out-houses, measuring in all 3,500 sq. yards. The property is mutated in the assessee's name in the municipal register. The assessee could not take possession of the property as the occupant, claiming herself to be the second wife of Rajawade, questioned the sale of property by the first wife. The assessee could not realise any rent from the person occupying the properties. When the wanted to evict the tenants, a suit was filed in the District Court. The assessee contested it and it was decided in assessee's favour on January 30, 1962. An appeal has been filed in the High Court by the other party.

2. In the wealth-tax return for the valuation date of March 31, 1961, the assessee showed a sum of Rs. 25,000 as advance against the purchase of this property.

3. The Wealth-tax Officer considered that the value of the property should be taken at its fair market value and that what had been shown in the wealth-tax return was below the market value. He referred to the locality in which the property was situated and the circumstances that even vacant sites were selling at more than Rs. 15 per sq yard. He called upon the assessee to furnish details of the extent of the vacant sites, etc.

4. The assessee pleaded his inability to do so. It was represented that he was not receiving any rent or any benefit from this property even though he was the legal owner, and that the sum of Rs. 25,000 should have been treated as an advance against the house prorperty.

5. The Wealth-tax Officer did not accept the contention of the assessee. He put the market value of the property at Rs. 70,000. A copy of the assessment order is annexure 'A', and forms part of the case.

6. The assessee appealed to the Appellate Assistant Commissioner against this order of the Wealth-tax Officer. A Appellate Assistant Commissioner considered that there were two aspects to the question, one legal and the other factual; that viewed as a question of law, it was evident that the legal title could been considered to be absolute and final only in case it had been derived from a party who had a valid title to sell the property and that though the District Court had decided in favour of the assessee, the matter was being taken to the High Court and, therefore, it was sub judice. In dealing with the other aspect, he observed that it was admitted fact that since the purchase in 1955, the assessee had not been able to exercise any of the attributes of ownership over this property and that the legal ownership was conditioned and almost rendered nugatory by the dispute as to the title which was sub judice and that the inescapable fact was that the property was in possession of the objecting party. He considered that the amount of Rs. 25,000 was to be treated as an advance and the value of the building should be restricted to that figure. A copy of the Appellate Assistant Commissioner's order is annexure 'B' and forms part of the case.

7. The department appealed to the Appellate Tribunal. The Tribunal held :

'14. We are of opinion that despite the dispute, the assessments are in order, except to the extent to be indicated below. The assessee has purchased the property under a registered sale deed. It is seen that the property stands in his name in the municipal register. Merely because somebody whose status the Appellate Assistant Commissioner has himself found it difficult to describe apart as objecting party, the assessment cannot be postponed. It would appear when the assessee wanted to exercise his power as an owner of the property and to evict the occupant, who happened to be second widow of the original seller, that a suit had come to be filed. The assessee has contested the suit and the District Court had found in his favour.....

17. The value of the property under section 7(1) of the Wealth-tax Act has to be estimated to be the price which it would fetch if sold in the open market on the valuation date. There have been substantial Improvements in land and building values since 1954, and the price of 1945 cannot be taken as the fair market value as on the valuation date. The presence of the 'objecting party' and difficulty to get vacant possession are relevant consideration to be taken into account for deciding the price of a house property and these would have a depressing effect. In our opinion, the fair market value may be taken at Rs. 50,000.

8. A copy of the Tribunal's order is annexure 'C' and forms part of the case.

9. The question of law is :

'Whether, on the facts and in the circumstances of the case, the inclusion of the property as such at its fair market value was justified ?'

10. This is a reference under section 27(1) of the Wealth-tax Act, to be hereinafter referred to as the 'Act'. The question of law referred for our opinion is :

'Whether, on the facts and in the circumstances of the case, the inclusion of the property as such at its fair market value was justified ?'

11. The facts of the case are fully set out in the statement of case. The only question is whether the Wealth-tax Officer was justified in taking into consideration the market value of the house at Malleswaram belonging to the assessee. The assessee claims that that house belong to him. The Wealth-tax Officer agrees with him. If that house belongs to the assessee as claimed by him, then its market value will have to be taken into consideration in computing the net wealth of the assessee. It may be that the assessee's claim to that house is disputed by someone else and if ultimately that person succeeds in his claim, the assessee may loss title in respect of that item of property and, in that event, the wealth-tax paid by him may not be refundable. But that is not a relevant circumstances in determining the net wealth of the assessee. As mentioned earlier, there is not controversy between the assessee and the Wealth-tax Officer as regards the ownership of the house in question. So long as the assessee claim that house as his, he has to pay wealth-tax in respect of the same. Mr. Bhat, the learned counsel for the assessee, wanted us to direct the Wealth-tax Officer to keep the assessment proceedings in abeyance. He did not invite our attention to any provision in the Act which permits such a course. The fact that such a course is possible to be adopted by the Wealth-tax Officer is no ground for us to direct his to do so. All that we are concerned in this case is whether, on the facts and in the circumstances of the case, the inclusion of the property's fair market value in the net wealth of the assessee was justified or, in other words, was in accordance with law. We are of the opinion that the inclusion of the market value of the property in question is in accordance with law and, therefore, it is justified.

12. In the result, our answer to the question referred to us is against the assessee.

13. The assessee to pay the costs of the department. Advocate's fee Rs. 250.

14. Question answered against the assessee.


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