B.K. Mehta, J.
1. Since in both these references, the dispute between the assessee and the Revenue is of identical nature, though the questions which have been raised are slightly in different terms, and since they arise out of the same facts but pertaining to two sets of different assessment years, namely, 1961-62 to 1963-64, in Wealth-tax Reference No. 5 of 1977 and 1964-55 to 1968-69 in Wealth-tax reference No. 19 of 1976, we intend to dispose of both these references by this common judgment.
2. A few relevant facts need be noticed in order to appreciate the dispute sought to be raised by the respective questions.
3. The assessee (deceased since October, 1983) purchased two pieces of land bearing S. Nos. 225/2 and 225/4, each of them admeasuring acres 5-18 gunthas situate within the city limits of Jamnagar in December, 1956. The assessee paid Rs. 1,000 for each of the said survey numbers. It appears that the State Government acquired S. No. 225/2 wholly while out of the land of S. No. 225/4, it acquired three acres of the land. The relevant notifications under section 4 of the Land Acquisition Act in respect of the two pieces of land were issued on September 5, and October 15, 1959. The dates of the notifications under section 6 are not available on record. The possession was taken over by the Government of these two pieces of land on August 15, 1960. The Land Acquisition Officer by his award dated July 18, 1962, awarded compensation of Rs. 24,293 to the assessee for the land acquired. The assessee being aggrieved by the offer made by the Land Acquisition Officer, sought reference under section 18 of the Land Acquisition Act, which was granted and, accordingly, the reference was made to the Court of Civil Judge (S.D.), Jamnagar. The learned Civil Judge, on appreciation of the evidence adduced before him, found that the offer of the Land Acquisition Officer was inadequate and the fair market value of the land should be fixed at Rs. 1.25 per sq. foot which would give a price of Rs. 54,449 per acre. The learned Civil Judge, therefore, awarded additional compensation to the tune of Rs. 5,72,892 to the assessee. The State Government being aggrieved by the judgment and award of the learned Civil Judge (S.D.), Jamnagar, carried the matter in appeal before this court. By the judgment and order of July 28, 1972 the Division Bench of this court consisting of M. P. Thakkar and A. A. Dave JJ., allowed the appeal of the State Government and set aside the judgment and order of the Civil Judge and restored the award of the Land Acquisition Officer. In other words, the High Court held that the offer of Rs. 24,293 by way of compensation for the] and acquired was wholly justified and adequate. It should be noted that the assessees had filed certain cross-objections which were not pressed. It should be noted at this stage that while the appeal was pending before this court, the assessee was permitted to withdraw the amount of compensation as awarded by the learned Civil Judge and deposited by the State Government on usual security being furnished by him to refund the said amount, in case the appeal of the State Government is allowed by the High Court with 4 per cent. interest therein for the period of enjoyment of the said amount, and accordingly on the appeal of the State Government being accepted and allowed by the High Court, the assessee had already made a refund together with the amount of interest at the agreed rate for the period for which he enjoyed the fruits of the award of the learned Civil Judge. It should also be noted that the assessee had carried the matter in further appeal to the Supreme Court on certificate being granted by this court, since at the relevant time, according to article 133(1)(a) of the Constitution of India, as it then stood under which if the amount of the value of the subject-matter in dispute in the court of first instance exceeded Rs. 20,000, the aggrieved Party was entitled to a certificate of fitness for appeal to the Supreme Court from the High Court. It should also be noted at this stage that the Wealth-tax Officer made the first assessment order in respect of the assessment year 1964-65 on February 24, 1973, while in respect of the subsequent assessment years, namely, 1965-66 to 1968-69, he made the order on April 24, 1973.
4. The Wealth-tax Officer has in the assessment order valued the wealth of the assessee at Rs. 5,72,892 being the amount of compensation for the land acquired. As a matter of fact, the learned Civil Judge has awarded additional compensation of Rs. 5,04,824.12 which included the solatium amount at the statutory rate together with 4% interest on the additional amount of compensation. This additional amount of compensation was over and above the amount of compensation of Rs. 24,293 awarded by the Land Acquisition Officer.
5. At this stage, we must revert to the development which took place in respect of the assessment years 1961-62 to 1963-64 which are the subject-matter of Wealth-tax Reference No. 5 of 1977. The Wealth-tax Officer had, in respect of these three assessment years, accepted the return of the assessee and assessed him accordingly for the purposes of wealth-tax. The assessee had shown the value of the wealth equivalent to the amount of compensation offered by the Land Acquisition Officer, that is,
6. Rs. 24,293. However, in view of the order of the Wealth-tax Officer passed on February 24, 1983,in respect of the assement year 1964-65, the commissioner thought it fit to exercise his revisional jurisdiction and directed the Wealth-tax Officer to reassess the wealth of the assessee on the same lines as has been done by the Wealth-tax Officer in respect of the assessment year 1964-65. The assessee being aggrieved by this order of the Commissioner, carried the matter in appeal before the Tribunal which by its common order of March 12, 1975, passed in the appeal preferred by the assessee in respect of the assessment years 1964-65 onwards directed that the Wealth-tax Officer could not have added this amount of additional compensation particularly in view of the decision of the High Court which had been already rendered by that time on July 28, 1972, and, therefore, in effect directed that the wealth of the assessee should be assessed as equivalent to the value of the compensation offered by the Land Acquisition Officer.
7. It is in this fact situation that the Commissioner of Wealth-tax has sought two references one in respect of the assessment years 1961-62 to 1963-64 and another in respect of the assessment years 1964-65 to 1968-69 which have been accordingly granted and numbered as Wealth-tax Reference No. 5 of 1977 and Wealth-tax Reference No. 19 of 1976, respectively. The questions which have been referred, as stated above, are slightly in different terms. In Wealth-tax Reference No. 19 of 1976, the following question has been referred to us for our opinion :
'Whether, on the facts and in the circumstances of the case, additional compensation of Rs. 5,72,892 awarded by the learned Civil Judge, Senior Division, Jamnagar, is includible in the total wealth of the assessee for each of the assessment years under reference ?'
8. In Wealth-tax Reference No. 5 of 1977, the following question has been referred to us :
'Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the Commissioner was not right in directing the Wealth-tax Officer to value the right of the assessee to receive compensation at the amount claimed by him by way of compensation and directing the Wealth-tax Officer to value the said right in the light of the Tribunal's order dated December 20, 1975, passed in W.T.A. NOS. 291 to 295 (Ahd) of 1974-75 ?'
9. On behalf of the Revenue, the learned counsel urged that the Tribunal was clearly in error in law in holding that the Wealth-tax Officer was not justified in assessing the wealth of the assessee at the value equivalent to the amount of compensation claimed by the assessee and in fact accepted and awarded by the learned Civil Judge in reference under section 18 of the Land Acquisition Act, since it is a statutory obligation for the purposes of assessing the value of the wealth of the assessee that the authority has to determine as to what fair market value it would have realised, if the assets had been sold in the open market and, therefore, the Tribunal could not have accepted the value of the assets as valued by the Land Acquisition Officer. In any case, it was urged that it was the statutory obligation of the Wealth-tax Officer to carry out this exercise by fixing the fair market value of the assets by finding out as to what price it would have realised, if sold in the open market, and since there is no material on the record collected by him to undertake that exercise, the court should decline to answer the question after pointing out the relevant legal position in respect of fixing the fair market value of the asset for the purposes of wealth-tax. In support of this alternative contention, the learned counsel relied heavily on the decision of the Supreme Court in Mrs. Khorshed Shapoor Chenai v. Ass. CED : 122ITR21(SC) .
10. On behalf of the assessee, it was urged that having regard to the provision of the Land Acquisition Act that when the amount of compensation is finally determined judicially, the acquisition proceedings would be concluded and it is on the final determination of the amount of compensation that the right to that income in the nature of compensation would arise and accrue and till then there is no liability in praesenti in respect of the additional amount of compensation claimed by the owner of the land sought to be acquired. The right of the assessee, according to the learned advocate for the assessee to get the additional compensation is merely an inchoate right which cannot be said to be a vested and complete one and it is only when the amount of compensation is adjudicated upon by the court finally that the liability arises. In support of this contention, reliance is sought to be placed on the decision of this court in Topandas Kundanmal v. CIT : 114ITR237(Guj) and Addl. CIT v. New Jehangir Vakil Mills Co. Ltd. : 117ITR849(Guj) , both of which have been referred by the Supreme Court in Mrs. Khorshed Shapoor's case : 122ITR21(SC) .
11. Before we deal with the contention urged in support and rebuttal of the questions referred to us, we will dispose of Civil Application No. 14 of 1985 which is moved on behalf of the Commissioner for bringing the heirs of the deceased-assessee on record in both these references. We need not bring all the heirs of the deceased assessee on record since according to section 19A of the Wealth-tax Act, the assessment is to be made on the wealth of a deceased-assessee in the hands of the executor or executors. Admittedly, there is a will and Shri Govindram Topandas is the executor of the will. We, therefore, direct that Shri Govindram Topandas be brought on the record as executor representing the assets of the deceased-assessee in both these references. Civil Application No. 14 of 1985 made on behalf of the Commissioner of Wealth-tax in both these references is accordingly disposed of, and the rule is made absolute, with no order as to costs, the service of which is waived by Mr. Patel appearing on behalf of the respondent in both these references.
12. Shortly stated, the principle enunciated by the Supreme Court in Mrs. Khorshed Shapoor's case : 122ITR21(SC) , is that in land acquisition proceedings, the claimant has only one right to receive compensation for the land at its market value on the date of section 4 notification, which right is quantified by the Collector under section 11 and by the civil court under section 26 of the said Act. The award of the Collector is merely an offer which, on acceptance, will extinguish the right to compensation. The non acceptance of the offer, or the acceptance under protest with a prayer for reference, will keep the right of compensation alive which a claimant can prosecute in the civil court. The right which a claimant pursues in the civil Court is not merely a right to litigate the correctness of the award. The correctness of the award is a collateral question in the course of the reference, since the right to compensation is not fulfilled. The evaluation of this right made by the civil court in a reference would not be the valuation of the asset for the purposes of either the Estate Duty Act or the Wealth tax Act on the specified date. The estimated value of the Tight to receive compensation, which is a property, is equal to the Collector's award but can never be equal to the tall claim made by the claimant in the reference, nor equal to the claim actually awarded by the civil court, since the hazard of litigation is a detracting factor in assessing the reasonable and proper market value of the property on a specified date, namely, the date of death, under the Estate Duty Act. The assessing authority is under an obligation to estimate the value bearing in mind the particular nature of the property, the marketability and the surrounding circumstances, including the hazard of litigation at the relevant date. Before the Supreme Court in Mrs. Khorshed Shapoor's case : 122ITR21(SC) , two show-cause notices - one for reopening the assessment under section 59(a) of the Estate Duty Act, and another for rectifying the order of assessment under section 61 of the Estate Duty Act - were challenged by the recipients by filing writ petitions in the High Court. The High Court upheld the validity of the notices. It is in the context of the validity of these two notices that the Supreme Court was speaking and indicated the functions of the assessing authority called upon to estimate the market value of the estate. The learned counsel for the Revenue, therefore, relied heavily on this decision in support of his contention that the Tribunal could not have assessed the value of the wealth merely by reference to the High Court's decision and, in any case, this court should not answer the questions since the necessary material to answer the questions as to whether the market value has been properly assessed on the basis of the additional compensation awarded by the civil court was not collected by the assessing authority by going through the correct exercise as indicated by the Supreme Court. We do see some force particularly in the second contention urged on behalf of the Revenue. However, on behalf of the assessee, the learned advocate, Mr. Patel, pointed out that the court should not lose sight of the basic fact that the market value has been assessed in the present case by the High Court by a reasoned and considerate judgment which would be binding, if not final, at the point of time when the Wealth-tax Officer was called upon to assess the value of the asset while passing the order of assessment. In the submission of the learned advocate for the assessee, the fact that the assessee had gone in appeal to the Supreme Court from the order of the High Court is not of much consequence, except for a very limited purpose since the leave granted by the High Court for appeal to the Supreme Court was, as a matter of course, having regard to the constitutional Provision then standing, namely, the value of the subject-matter of appeal. The learned advocate also emphasised that having regard to the fact of the substantial period exceeding twenty years has elapsed since the relevant date on which the fair market value was to be assessed, and also having regard to the time which the Supreme Court is likely to take before the appeal from the order of the High Court reaches for an effective hearing, if the assessing authority applies the correct multiplier for discounting the best value which the assessee would get in the Supreme Court, which in no circumstances can exceed the value assessed by the civil court, the value on the relevant valuation date of every financial year cannot exceed the value offered by the Land Acquisition Officer, since the assessing authority will have to discount some percentage for every year which has passed since then. In his submission, if the exercise as indicated by the assessee is undertaken, on the facts and in the circumstances of the present case, the value may be less than the value offered by the Land Acquisition Officer. He repeatedly emphasised by taking us through the decision of the Supreme Court that the chances of the assessee to win in the Supreme Court, to put it mildly, do not appear to be so overwhelming, and in any case the discounted value for the substantial period which has elapsed since the date of the valuation would be such a detracting factor that the court should not decline to answer the questions.
13. We have given anxious consideration to the rival contentions. Having regard to the context of the facts in which the Supreme Court was speaking and particularly having regard to the fact that the question which arose before the Supreme Court as to whether the show-cause notice for reopening the assessment and for rectification of the assessment orders already made in the light of the quantification of the value of the right to receive compensation in civil court under section 26 against which the appeal of the State Government was pending in the High Court which fact-situation is not present before us in the present reference, where the High Court by a reasoned and considered judgment determined the value and quantified it, we are of the opinion, prima facie, that there is not much scope for enhancing the value of the property, namely, the right to receive compensation, merely because leave for appeal to the Supreme Court is granted by the High Court and which has been granted as a matter of course in view of the constitutional Provision in that behalf at all the relevant times. In spite of this prima facie opinion, we do feel the difficulty which has been pointed out on behalf of the Revenue that the exercise which ought to have been done as indicated by the Supreme Court has not been fully attempted and, therefore, we should not rush to answer the questions, but leave them to the Tribunal to adjust the matter in the light of the submissions that may be made by the Revenue as well as the assessee without having recourse to remitting the matter to the Wealth-tax Officer for purposes of carrying out the exercise afresh. We have pointed out to the learned counsel for the Revenue that the fact-situation with which we are concerned in these references is very difficult to overlook since the Division Bench of this very court has assessed and estimated the fair market value of the property, namely, the right to receive compensation for the land acquired by the Government. We have also pointed out to the learned counsel for the Revenue that a substantial period has elapsed for which, if a proper discount factor is applied, the Revenue may not find itself in a more advantageous position; but having regard to the legal position which has been laid down by the Supreme Court, we are of the opinion that in the absence of a proper exercise having been done, we should decline to answer the questions following the course adopted by the Supreme Court in CIT v. Indian Molasses Co. P. Ltd. : 78ITR474(SC) . We hope and recommend to the Tribunal that it will complete this exercise within a period of eight weeks from the date of receipt of the order by the Tribunal in the light of the material which has been already collected and the further material, if the parties want to adduce, and in the light of what we have stated here in-above.
14. The result is that we decline to answer both the questions in both these references, and leave them to the Tribunal to adjust accordingly, with no order as to costs. Rule made absolute in civil application with no order as to costs.