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Manyam Meenakshamma Rajahmundry v. Commissioner Of Wealth-Tax

Andhra Pradesh High Court

Jul 23, 1965

Judgment

Subsequent
References

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Structured Summary of the Opinion — Krishna Rao, J.

Factual and Procedural Background

The reference arises under Section 27(1) of the Wealth Tax Act (XXVII of 1957). The assessee, Srimathi Manyam Meenakshamma, a resident of Rajahmundry, was assessed for the assessment year 1957–1958 (valuation date 31-3-1957) to a total wealth of Rs. 5,19,191 by the Wealth Tax Officer.

The principal contested items and figures in the assessment were:

a forest of about 200 square miles, valued by the assessee at Rs. 21,000 but by the Wealth Tax Officer at Rs. 2,00,000 (the officer capitalised an average income of Rs. 10,000 by 20 times);
agricultural lands which had been taken over by the Government under the Estates (Abolition and Conversion into Ryotwari) Act (XXVI of 1948), with the Wealth Tax Officer including Rs. 71,279 (balance of compensation) in the assessee's total wealth; and
a house property at Yanam, valued by the assessee at Rs. 5,000 but fixed by the Wealth Tax Officer at Rs. 50,000.

On appeal, the Appellate Assistant Commissioner rejected two of the assessee's contentions but reduced the Yanam valuation from Rs. 50,000 to Rs. 40,000. The assessee appealed to the Income-tax Appellate Tribunal, adding contentions that the forest lands were agricultural and that Yanam lay outside Union territory and so should be excluded. The Tribunal concluded the forest lands were not agricultural (no husbandry and spontaneous growth of trees), treated Yanam as under de facto Government of India jurisdiction (ordering a rebate under the law), and reduced market values to Rs. 1,50,000 for the forest and Rs. 25,000 for the Yanam house.

The Tribunal referred three questions of law (set out below) to the Court on the assessee's application.

Legal Issues Presented

Whether the forest lands, trees in which are of spontaneous growth, constitute agricultural lands within the meaning of section 2(e)(i) of the Wealth Tax Act and are liable to exemption?
Whether the Department was right in including in the total wealth of the assessee the sum of Rs. 71,279 being the probable amount of compensation receivable by the assessee from the Government under the Madras Estates (Abolition and Conversion into Ryotwari) Act of 1948?
Whether the value of the property situate in Yanam was includible in the total wealth of the assessee?

Arguments of the Parties

Assessee's Arguments (as presented by Sri I. Vishnu Rao)

The estate (including the forest) had been taken over by the Government in 1953 under the Estates (Abolition and Conversion into Ryotwari) Act and therefore could not be treated as the assessee's assets.
The forest was not worth the amounts assessed (e.g., should be less than Rs. 40,000) because acquisition by Government was under consideration.
The income from the forest would be received only for a limited period (three years), so it constituted an interest in property exempt under clause (v) of section 2(e) of the Act.
The forest lands were agricultural lands (either because capable of being used for agriculture or on other grounds advanced).
The Rs. 71,279 shown as half the compensation was only a provisional deposit under section 54-A of Act XXVI of 1948 and the final amount under section 39 was pending; therefore the amount was unascertained and should not have been included as total wealth.
If the compensation is receivable in future instalments, its present value should have been estimated (a praesenti valuation) rather than including the unadjusted amount.
With respect to the Yanam house, its valuation at Rs. 50,000 was excessive and/or the property lay outside the territory such that it should not be includible in total wealth of an Indian resident under the Act.

Revenue / Department's Position (as reflected in the record)

The Wealth Tax Officer treated the forest as a taxable asset and capitalised income at 20 times the average income to arrive at Rs. 2,00,000.
The Officer included Rs. 71,279 (balance of compensation) in total wealth on the basis that it represented compensation due to the assessee for villages taken over.
The Officer assessed the Yanam house at Rs. 50,000.
The Appellate Assistant Commissioner considered the provisional estimate for section 54-A deposits to be made conservatively and rejected exclusion claims, although he reduced Yanam's valuation from Rs. 50,000 to Rs. 40,000.
The Tribunal treated the compensation balance as an indeterminate but real debt being paid by instalments and directed revision of the assessment if final determination differed; it also treated Yanam as under de facto control of Government of India and applied rebate provisions accordingly.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Megh Raj v. Allah Rakhia, AIR 1947 P.C. 72	Construction of the word "land" (as used in a statute) can include every form of land, whether agricultural or not.	Used to explain a prior authoritative approach to the meaning of "land" and to frame the inquiry into what "agricultural land" must mean in the Wealth Tax Act context.
Megh Raj v. Allah Rakhia, AIR 1942 F.C. 27	Observation that consideration might be given to the general character of land rather than its use at a particular time when construing entries in Lists of the Constitution.	Cited as part of competing authorities on whether general character or present use should determine "agricultural" character; the Court reviewed and contrasted this view with later authority.
I.T. Commissioner v. Benoykumar, AIR 1957 SC 768	Definitive statement of the meaning of "agriculture": primary/basic operations (tilling, sowing, planting) and the role of subsequent operations; nature of products immaterial; basic operations are essential to classify an operation as agricultural.	Adopted as the leading authority on the definition of "agriculture" and used to conclude that "agricultural land" entails a nexus with basic agricultural operations.
ILR 24 Mad 421; ILR 38 Mad 738 : AIR 1915 Mad 781 (references to opinions by Bhasyam Ayyangar and Sadasiva Ayyar, J.)	Earlier narrower views that would restrict "agriculture" to production of grain and food products.	Not followed for restricting the concept; the Court noted these narrower views existed but relied on Benoykumar to adopt a broader understanding of "agriculture".
Case cited as AIR 1944 Mad 401 (Patanjali Sastri, J.)	Statement that for purposes of relevant constitutional entries, "agricultural lands" must include lands used or capable of being used for raising valuable plants or for other husbandry purposes.	Referenced as part of the body of authority addressing whether capacity or present use should determine "agricultural" character; the Court discussed this perspective but preferred to follow the Supreme Court's later pronouncement.
Sarojini Devi v. Sri Kristna, AIR 1944 Mad 101	Authority relied upon by assessee's counsel in support of a broader test taking general character of land into account.	Not adopted as determinative; cited among authorities on the question of general character vs present use.
Chandrasekara Bharati Swamigal v. Duraiswami Naidu, ILR 54 Mad 900 : AIR 1931 Mad 659	Referenced on the question whether "circumstances in which the cultivation is carried on" should determine applicable law.	Referred to in the discussion on authorities considering general character and use of land; used to contextualise competing approaches.
Rasiklal Chiman Lal v. Commissioner of Wealth Tax, 1965-1 ITJ 82 : AIR 1965 Guj 259	Observation (as cited) that using capacity for agriculture as the criterion would be too broad (e.g., idle building sites could be called agricultural).	Relied on to support the view that mere potentiality/capacity is not the correct test for "agricultural land".
Krishna Rao v. Third W.T. Officer, AIR 1963 Mys 111	Observation that present characteristics, not potentialities, should be the criterion for determining whether land is agricultural in character.	Adopted as supporting the Court's preference for present use/character as the decisive fact-based criterion.

Court's Reasoning and Analysis

The Court addressed the three referred questions sequentially and constrained its analysis to the issues framed and materials on record.

Question 1 — Whether the forest lands are "agricultural land" under section 2(e)(i)

The Court began with the statutory text of section 2(e)(i) (assets excludes "agricultural land and growing crops, grass or standing trees on such land") and noted the constitutional backdrop (Entry No. 86, List I — tax on capital value exclusive of agricultural land).
It observed there is no statutory definition of "agriculture" or "agricultural land" in the Constitution or the Wealth Tax Act, and therefore ordinary English meaning and judicial authorities must guide construction.
The Court relied principally on the Supreme Court in I.T. Commissioner v. Benoykumar (AIR 1957 SC 768) to articulate the meaning: "agriculture" entails basic operations (tilling, sowing, planting) requiring human skill and labour; subsequent operations only qualify as agricultural when they are a continuation of such basic operations.
From that analysis the Court concluded that "agricultural land" means land ordinarily used for agriculture or for purposes subservient or allied to agriculture — a nexus of the land with the basic agricultural operations is required.
The Court considered competing authorities which advocated looking at the general character or capacity of the land, but it preferred the approach that emphasises present characteristics and ordinary use (citing Krishna Rao v. Third W.T. Officer and observations that potentiality alone would be too broad).
Turning to facts on record, the Court found no evidence that the forest was being ordinarily used for agricultural operations or operations subservient/allied to agriculture by the valuation date; the Tribunal had recorded that "admittedly no agricultural operations are being performed" and the trees were of spontaneous growth.
On these factual findings (and noting the assessee had herself filed a return valuing the forest on basis of net income), the Court answered the first question in the negative: the forest lands did not constitute agricultural land within section 2(e)(i).

Question 2 — Whether Rs. 71,279 (probable compensation) was properly included in total wealth

The Court noted that the assessee had herself shown Rs. 71,279 in her return as half the compensation due (a deposit under section 54-A of Act XXVI of 1948).
The assessee's submission that the amount remained unascertained because final determination under section 39 was pending was considered; the Appellate Assistant Commissioner thought the rough estimate under section 54-A would be conservative and based on known data.
The Tribunal viewed the amount as an indeterminate but real debt due to the assessee, with payments being made in instalments, and directed revision if the final determination altered the amount.
The Court observed that even if the amount were an actionable claim (an unsecured debt), it would still constitute an asset within section 2(e). There was no material to make a praesenti valuation of future instalments, and the assessee had already shown the sum in her return.
Consequently, the Court held that inclusion of the stated sum in total wealth was proper (answer to Question 2: affirmative), while noting that the Tribunal's direction for revision if final determination differed left the assessee without real grievance.

Question 3 — Whether the Yanam property value was includible in total wealth

The Court referred to Section 6 of the Wealth Tax Act, under which exclusion of assets outside India is available only to non-citizens or non-residents; the assessee was not entitled to that benefit.
No provision was pointed out by the assessee's counsel that permitted exclusion of the Yanam house from total wealth; however Rule 4 of the Schedule to the Act provides for a reduction of wealth tax where assets located outside India are included in net wealth.
The Tribunal had applied the rebate provision in view of the territory being under de facto jurisdiction of the Government of India.
The Court concluded that the Yanam property's value was includible in the assessee's total wealth (answer to Question 3: affirmative), while the Tribunal's application of the rebate rule was given effect to in the order below.

Holding and Implications

The reference was answered in the following manner:

On Question 1: The Court held that the forest lands (with trees of spontaneous growth and no agricultural operations on record) do not constitute "agricultural land" within section 2(e)(i) of the Wealth Tax Act. (Answer: negative.)
On Question 2: The Court held that the sum of Rs. 71,279 (shown by the assessee as half the compensation deposit under section 54-A) was properly includible in the assessee's total wealth; the Tribunal's direction for revision if final determination differs was noted. (Answer: affirmative.)
On Question 3: The Court held that the Yanam property value was includible in the assessee's total wealth; the Tribunal's application of a rebate under the Schedule was given effect to. (Answer: affirmative.)

Consequences expressly recorded in the opinion:

The reference is answered in accordance with the Court's findings on the three questions.
The assessee was ordered to pay the costs of the Department and an advocate's fee of Rs. 400.

No broader change in legal doctrine or new precedent beyond the Court's application of existing authorities is stated in the opinion; the decision resolves the referred questions as between the parties on the facts and law presented.

Result: Reference answered. The assessee to pay costs as directed.

Show all summary ...

Krishna Rao, J.:— This is a reference under Section 27(1) of the Wealth Tax Act (XXVII of 1957). The assessee Srimathi Manyam Meenakshamma, a resident of Rajahmundry was assessed to a total wealth of Rs. 5,19,191 by the Wealth Tax Officer in regard to the assessment year 1957–1958 for which the relevant valuation date is 31-3-1957. She owned extensive immoveable properties, including forest and agricultural lands and buildings situated at various places. The forest measuring about 200 sq. miles was valued by her at Rs. 21,000. The Wealth Tax Officer, however, determined its value to be Rs. 2,00,000 as he found that the average income during the last three assessment years was Rs. 10,000 and capitalised this income 20 times. The agricultural lands had been taken over by the Government under the Estates (Abolition and Conversion into Ryotwari) Act (XXVI of 1948). The Wealth Tax Officer included the balance of Rs. 71,279 of the compensation amount payable to the assessee in her total wealth for the purpose of the assessment. As regards the buildings, it is relevant only to mention that a house property at Yanam was valued by the assessee at Rs. 5,000 but the Wealth Tax Officer fixed it as Rs. 50,000.

2. The assessee appealed to the Appellate Assistant Commissioner contending that the forest was not worth even Rs. 40,000, because the acquisition of the forest by the Government was under consideration. With regard to the compensation to be received from the Government, she contended that it was not an ascertained or definite amount but depended on the survey and ryctwari settlement. In respect of the house property at Yanam, she objected that its valuation at Rs. 50,000 was excessive. The Appellate Assistant Commissioner negatived the first two contentions of the assessee but reduced the valuation of the house property at Yanam from Rs. 50,000 to Rs. 40,000. The assessee took the matter on a further appeal to the Income-tax Appellate Tribunal. Besides the; points urged before the Appellate Assistant Commissioner, she contended that the forest lands constituted agricultural lands, that the house property at Yanam was situated outside the Union territory and that these could not be included in her total wealth. The Tribunal held that the forest lands were not agricultural lands because no act of husbandry was performed thereon and the trees in the forest were of spontaneous growth. On the question as to the house property at Yanam, it held that the territory was under the de facto jurisdiction of the Government of India and that the assessee was only entitled to rebate of tax as provided under the law in view of the territory having not been acquired de jure by the Government of India. In respect of these two items, it merely reduced the market value of the forest lands to Rs. 1,50,000 and of the house property at Yanam to Rs. 25,000.

3. Upon the application of the assessee, the following questions of law were referred to us by the Tribunal:

1. Whether the forest lands, trees in which are of spontaneous growth, constitute agricultural lands within the meaning of section 2(e)(i) of the Wealth Tax Act and liable to exemption?

2. Whether the Department was right in including in the total wealth of the assessee the sum of Rs. 71,279 being the probable amount of compensation receivable by the assessee from the Government under the Madras Estates (Abolition and Conversion into Ryotwari) Act of 1948? and

3. Whether the value of the property situate in Yanam was includible in the total wealth of the assessee?.

4. It will be convenient to refer to the Wealth Tax Act (XXVII of 1957) hereinafter referred to as the Act. In connection with the first question, Sri I. Vishnu Rao, the learned counsel for the assessee, urged before us that the entire estate including the forest lands was taken over in 1953 by the Government under the Estates (Abolition and Conversion into Ryotwari) Act XXVI of 1948 and that the forest lands could not be taken as assets belonging to the assessee at all. But in the return dated 19-5-1958 submitted by the assessee, it was stated that “since the forest is likely to be taken over by Government the valuation is fixed on the basis of 3 years' net income”. It is therefore difficult to agree with the assessee's contention that the forest was already taken over earlier by the Government in 1953.

5. Sri I. Vishnu Rao next submitted that the income from the forest was likely to be received by the assesse only for a period of three years and therefore it constituted an interest in property which is exempted by clause (v) of section 2(e) of the Act. But the Tribunal has observed in its order dated 1-1-1962 that the assessee was disputing the action of the Government and that the matter was pending decision in the High Court. In its statement of the case, the view taken by the Tribunal is that no issue arose out of the action of the Government and that the market value determined by it is a question of fact. No materials have been placed before us on the merits of the submission founded on section 2(e) clause (v) of the Act. We shall therefore confine ourselves to the question as framed by the Tribunal.

6. The answer to this question turns on the construction of section 2(e)(i) of the Act, which is in the following terms:—

(e) “assets” includes property of every description, moveable or immoveable, but does not Include—

(i) agricultural land and growing crops, grass or standing trees on such land;’

Sri I. Vishnu Rao's contention is that the forest lands are capable of being used for agricultural purposes and therefore constitute agricultural lands. This leads us to a consideration of the meaning of the expression “agricultural lands” in section 2(e)(i) of the Act.

7. The Act imposes a tax on the capital value of the assets of persons and was manifestly passed by the Parliament by virtue of its powers under Entry No. 86 of List I in the Seventh Schedule to the Constitution, which reads thus:—

“Taxes on the capital value of the assets, exclusive of agricultural land, of individuals and companies; taxes on the capital of companies;”

There is no definition of either “agriculture” or “agricultural land” in the Constitution, though “agricultural income” is defined in Article 366(1) and carries the meaning given to it in section 2(1) of the Indian Income-tax Act the words of the expression “agricultural land” must therefore be interpreted as bearing their ordinary and natural meaning in the English language as applied to a constitution. The word land” in Entry No. 21 of List II in Schedule VII of the Government of India Act, 1935, which corresponds to Entry No. 18 of List II in the Seventh Schedule to the Constitution, was construed by Lord Wright in Megh Raj v. Allah Rakhia, AIR 1947 P.C 72 as including every form of land, whether agricultural or not.

8. The meaning of the word “agriculture” was settled by the Supreme Court in I.T Commissioner v. Benoykumar, AIR 1957 SC 768 Bhagwati, J. who spoke for their Lordships of the Supreme Court, said:

“……the primary sense in which the term agriculture is understood is agar—field and cultra—cultivation of the field and (if) the term is understood only in that sense, agriculture would be restricted only to cultivation of the land in the strict sense of the term meaning thereby, tilling of the land, sowing of the seeds, planting and similar operations on the land.

They would be the basic operations and would require expenditure of human skill and labour upon the land itself. There are however other operations which have got to be restored to by the agriculturist and which are absolutely necessary for the purpose of effectively raising the produce from the land.

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We are of opinion that the mere performance of these subsequent operations on the products of the land where such products have not been raised on the land by the performance of the basic operations which we have described above would not be enough to characterise them as agricultural operations. In order to invest them with the character of agricultural operations, these subsequent operations must necessarily be in conjunction with and a continuation of the basic operations which are the effective cause of the products being raised from the land.

xxxxxx

In considering the connotation of the term “agriculture” we have so far thought of cultivation of land in the wider sense as comprising within its scope the basic as well as the subsequent operations described above, regardless of the nature of the products raised on the land. These products may be grain or vegetables or fruits which are necessary for the sustenance of human beings including plantations and groves, or grass or pasture for consumption of beasts or articles of luxury such as, betel, coffee, tea, spices, tobacco, etc., or commercial crops like cotton, flax, jute, hemp, indigo etc.

All these are products raised from the land and the term “agriculture” cannot be confined merely to the production of grain and food products for human beings and beasts as was sought to be done by Bhasyam Ayyangar, J. in ILR 24 Mad 421 or Sadasiva Ayyar, J., in ILR 38 Mad 738 : AIR 1915 Mad 781(2) but must be understood as comprising all the products of the land which have some utility either for consumption or for trade and commerce and would also include forest products such as timber, sal, and piyasal trees, casuarina plantations, tendu leaves, horranuts etc.

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………………If the basic operations are there, the rest of the operations found themselves upon the same.

But if these basic operations are wanting the subsequent operations do not acquire the characteristic of the agricultural operations.”.

9. It will thus be seen that the word “agriculture” means the performance of operations like tilling of the land, sowing of the seeds or planting in order to raise products of some utility and that the nature of the products raised on the land is immaterial. The word “agricultural” means “of or pertaining to agriculture; connected with husbandry or tillage of the ground”. It follows that “agricultural land” is land which relates to or is connected with the aforesaid basic operations of agriculture. We have next to consider what must be the nexus between the basic operations and the land in order to constitute agricultural land.

10. In AIR 1947 P.C 72, there was an implied decision by the Judicial Committee as to the nature of the nexus. Dealing with the definition of “land” in the Punjab Restitution of Mortgaged Lands Act (IV of 1938), which term was found to refer only to agricultural land, Lord Wright said:—

“That definition restricts it to land ‘occupied or let for agricultural purposes or for purposes subservient to agriculture or for ??? The addition of the word ‘pasture’ has ??? relied on as extending the scope of the ??? beyond agriculture, but pasture is ??? ‘land’ within item 21 of List 2. It may ??? been mentioned ex abundanti cautela but in any case it is sufficiently allied to agriculture generally to be treated as a species of agricultural land or at least as land occupied or let for purposes subservient to agriculture and as such within the general scope of an Act dealing with agricultural land.”.

11. In our opinion, “agricultural land” means land ordinarily used for the purpose of agriculture or for purposes subservient to or allied to agriculture.

12. Sri I. Vishnu Rao strongly relies on certain observations of the Federal Court in Megh Raj v. Allah Rakhia, AIR 1942 FC 27 and of the Madras High Court in Sarojini Devi v. Sri Kristna, AIR 1944 Mad 101. In AIR 1942 FC 27, after referring to the conflict of authorities as to the connotation of “agriculture” Varadachariar, J., said:—

“It may on a proper occasion be necessary to consider whether for the purposes of the relevant entries in Lists 2 and 3, Constitution Act, it will not be right to take into account the general character of the land (as agricultural land) and not the use to which it may be put at a particular point of time. It is difficult to impute to Parliament the intention that a piece of land should, so long as it is used to produce certain things, be governed by and second according to laws framed under List 2, but that when the same parcel of land, is used to produce something else (as often happens in this country), it should be governed and descend according to laws framed under List 3”.

13. Similarly, in AIR 1944 Mad 401, Patanjali Sastri, J., stated:—

“…it would be somewhat grotesque to suppose that Parliament intended that lands devoted to the production of one kind of crop should devolve according to laws passed by Provincial Legislatures, while those used for growing another kind should pass according to laws made by the Central Legislature, or that ‘the circumstances in which the cultivation is carried on’ (per Reilly, J. in Chandrasekara Bharati Swamigal v. Duraiswami Naidu, ILR 54 Mad 900 : (AIR 1931 Mad 659)) should determine the law which governs the devolution of the land. Nor could it have been intended that succession to such lands should depend on the degree of tillage or preparation of the soil or of the skill and labour expended in rearing and maintaining the plants. We are of opinion that for the purposes of the relevant entries in Lists II and III of Sch. 7, the expression “agricultural lands” must be taken to include the lands which are used or are capable of being used for raising any valuable plants or trees or for any other purposes of husbandry.”.

14. Both the learned Judges had in mind the meaning given to the word “agriculture” based on the nature of the products raised on the land. This consideration, however, arises no longer in view of the pronouncement of the Supreme Court in AIR 1957 SC 768. The general character of a land, if it is to be considered independently of its connection with agriculture, would give little content to the adjective “agricultural” in the expression “agricultural and” If the capacity for being used for agriculture is a criterion, as observed by Bhagwati ??? in Rasiklal Chiman Lal v. Commissioner of Wealth Tax, 1965-1 ITJ 82 : (AIR 1965 Guj 259) even building sites lying idle would be agricultural lands “since it would always be possible to say of them that they are capable of being used for agricultural purpose”. We are inclined to agree with the observation of Hegde and Ahmad Ali Khan, JJ. in Krishna Rao v. Third W.T Officer, AIR 1963 Mys 111, that the present characteristics and not the potentialities of a land are the proper criterion. If a land is originally used for purposes of agriculture or for purposes subservient to or allied to agriculture, it would be agricultural land. If it is not so used, it would not be agricultural land. The question how a land is ordinarily used would be one of fact depending on the evidence in each case. If for instance, an agricultural land as we have interpreted above, is left fallow in a particular year owing to adverse seasonal conditions or to some other special reason, it would not cease to be agricultural land.

15. The Tribunal has observed in paragraph 8 of its statement of the case that the contention as to the forest lands in question being agricultural lands was put forward for the first time during the appeal to the Tribunal. This may not be correct Decause, as pointed out by Sri I. Vishnu Rao, even in her return dated 19-5-1958 the assessee stated referring to the forest “I claim it non-taxable as it is agricultural in nature”. In its order of 1-1-1962, the Tribunal has stated that “admittedly no agricultural operations are being performed” on the forest lands. Sri I. Vishnu Rao denies that the assessee made any such admission. Be that as it may, we find nothing on the record to suggest that the forest lands were being ordinarily used either for the purposes of agriculture or for purposes subservient to or allied to agriculture by the valuation date. It follows that our answer to the first question must be in the negative.

16. Turning to the second question, it has to be noticed at the outset that in her return dated 19-5-1958, the assessee herself showed a sum of Rs. 71,279 as being half the compensation amount due to her by the Government for the villages taken over.

17. The position of Sri I. Vishnu Rao is that this figure was based on the amount of the deposit made by the Government under section 54-A of Act XXVI of 1948, as advance payment of one half of the roughly estimated amount of the compensation. Since the final determination under section 39 of the amount of compensation is pending, he urges that the amount due to the assessee is unascertained. The Appellate Assistant Commissioner was of the view that the rough estimate for the purposes of section 54-A would have been made on a conservative basis and as accurately as possible from all the known data.

18. The Tribunal observed that although the balance of the amount of compensation is indeterminate, it is a debt due to the assessee in respect of which she was receiving payments in instalments. It directed that the assessment be revised if the final determination of the amount of compensation is different. The result of this direction is that the assessee can have no real grievance. On her own showing, the sum of Rs. 71,279 is at any rate the probable amount of compensation due to her.

19. Sri I. Vishnu Rao argued at one stage that the amount of compensation due to the assessee is only an actionable claim, but subsequently recognised that this would make no difference to its constituting assets within the meaning of section 2(e) of the Act. An actionable claim is defined in section 3 of the Transfer of Property Act as either unsecured debt or beneficial interest in movable property not in the claimant's possession. The amount of compensation due to the assessee, even if it is assumed to be an actionable claim, would be only an unsecured debt, because it is manifestly not a beneficial interest in moveable property.

20. Sri I. Vishnu Rao finally urged that as the amount of compensation is receivable in instalments only in the future, it ought to have been reduced by making a valuation in praesenti of the future instalments. There are no materials before us disclosing the amounts of the instalments. The mode of valuation suggested does not really arise for consideration because, as we have already mentioned the assessee herself showed Rs. 71,279 in her return as the probable amount of compensation receivable by her. Our answer to the second question is in the affirmative. But nothing we have stated is in tended to mean that the relief directed by the Tribunal to be given to the assessee will be inadmissible, regarding which we express no opinion.

21. The final question relates to the house property at Yanam. Under Section 6 of the Act the right of exclusion of assets and debts outside India is conferred only on persons who are not citizens of India or are non-residents in India. It is not disputed that the assessee is not entitled to the benefit of Section 6 of the Act.

22. Sri I. Vishnu Rao is not able to bring to our notice any provision of law under which the assessee could claim exclusion of the house property at Yanam. Rule 4 of the Schedule to the Act provides for reduction of the wealth tax where assets located outside India are included in the net wealth of the assessee. The order of the Tribunal gives effect to this provision. Our answer to the third question is in the affirmative.

23. The reference is answered accordingly. The assessee will pay the costs of the Department. Advocate's fee Rs. 400.

LI/G.G.M

24. Reference answered.