"Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessee had no right on the relevant valuation dates to receive any compensation for the acquisition of his estate from the Government of West Bengal ?"

Although the question is framed in that way the real issue by refraining the question is:

"Whether, in the facts and circumstances of this case, the right to compensation under the West Bengal Estates Acquisition Act, 1953, constitutes an asset within the meaning of the Wealth-tax Act and specially in view of the fact where such compensation under the West Bengal Estates Acquisition Act has neither been determined nor paid ?"

The facts of this case lie within a small compass. The statement of case refers to the assessments during 1957-58, 1958-59 and 1959-60. There are six reference applications upon which the statement of case is made raising the combined contention relating to the inclusion within the net wealth of the assessee the value of his right to receive compensation under the West Bengal Estates Acquisition Act, 1953. The admitted fact, as appeared in the statement of case, is that the assessee had extensive zamindary properties which vested in the State of West Bengal under the provisions of the West Bengal Estates Acquisition Act. The Wealth-tax Officer assessed the right to receive compensation at Rs. 32,00,000 for each of the three years under reference. The Appellate Assistant Commissioner, however, reduced the value of the assessee's right to receive compensation to Rs. 3,25,000 for each year. It is said that the Appellate Assistant Commissioner held that there was a debt owed by the Government under the Estates Acquisition Act to the assessee which could be quantified under the provisions of that Act. In other words, the Appellate Assistant Commissioner took the view that the assessee had an actionable claim against the Government, the value of which was includible in the net wealth of the assessee as an asset within the meaning of section 2(e) of the Wealth-tax Act. The valuation for wealth-tax purposes was made on the basis of agricultural income-tax paid on these agricultural lands. On behalf of the assessee it was contended that on the relevant date of valuation the assessee had no right to receive any compensation from the Government and, therefore, he had no actionable claim assessable to wealth-tax.

The decision of the Tribunal upholding the contention of the assessee was against the Commissioner of Wealth-tax. The Tribunal's conclusion can be briefly summarised here. In the first instance, it points out that the compensation is only payable to the intermediary whose right has been acquired by the Government under the West Bengal Estates Acquisition Act which provides by section 14(1) that the compensation officer is required to prepare the compensation assessment roll within 8 years from the date of vesting specifying, inter alia, the amount of compensation payable in accordance with the provisions of that Act. Therefore, the Tribunal says that when the compensation assessment roll has been prepared and finally published under section 21 of the Act the compensation officer is required to make an offer of payment of the compensation to the intermediary. On the basis of this reasoning the Tribunal says that as the fact is that no compensation roll has been prepared by the compensation officer as yet under section 14(1) of the West Bengal Estates Acquisition Act, there is no right in the assessee to any compensation. This is the first and paramount reason of the Tribunal for not including the alleged right to compensation in the net wealth of the assessee. The Tribunal quoted section 23(l)(a) of the West Bengal Estates Acquisition Act, where it is provided, inter alia :

"As soon as may be after the date of the final publication, the compensation officer shall, in the prescribed manner, make an offer of payment of the compensation to the intermediary who is entitled to such compensation in terms of the compensation assessment roll together with interest at the rate of three per centum per annum of such compensation accruing from the date of vesting to the date of the offer of payment."

The logic of the Tribunal is that the intermediary is not entitled to receive any compensation until the compensation assessment roll has been prepared and finally published under section 21 of the Act, although he may be allowed ad interim payment from time to time against the compensation receivable by him after the final publication of the compensation roll. Therefore, the Tribunal came to the conclusion, (1) that the Wealth-tax Officer was wrong in assuming that the assessee had a right to receive compensation upon the claim preferred by him in Form 3A under rule 10(3) of that Act, and (2) the Appellate Assistant Commissioner was wrong in holding that the assessee had an actionable claim which had a hypothetical market value on the valuation date.

The Tribunal repelled also the argument made on behalf of the revenue that the provision for interest suggests a different conclusion. It was argued that under section 23(1) of the West Bengal Estates Acquisition Act, which is quoted above, interest was payable at the rate of 3% on that compensation accruing from the date of vesting. Therefore, it was argued by the revenue that the fact that the intermediary was entitled to receive interest from the date of vesting was itself evidence that he acquired a right to receive compensation from the date of vesting. The Tribunal came to the conclusion that such a provision merely related to the fixation of the claim of the interest payable on the compensation and did not speak of the accrual of the right to receive compensation which, according to the Tribunal, arose only after the compensation assessment roll had been prepared and finally published. The Tribunal was categorical in holding that the assessee had no right to demand payment of compensation before the final publication of the compensation assessment roll. The final conclusion of the Tribunal was expressed in the following way :

"We would, therefore, hold that the assessee had no right on the valuation date to receive any compensation for the acquisition of his estate. Accordingly, we delete the addition of Rs. 3,25,000 from his net wealth as at the material valuation dates."

This question raises a point of fundamental importance in taxation. It raises the question whether the right to compensation itself apart from the actual compensation is a kind of wealth on which wealth-tax is attracted under the Wealth-tax Act. The more far-reaching implication is that this alleged right to compensation springs from agricultural land which is expressly excluded from the definition of "assets" under section 2(e)(l)( i) of the Wealth-tax Act. The relevancy of this consideration will be clear when it is recalled that the property acquired under the West Bengal Estates Acquisition Act in this case was zamindary property, which was agricultural land. It is also important to bear in mind the significant fact that the Wealth-tax Officer in this case calculated the value on the basis of the agricultural income determined by the Agricultural Income-tax Officer in this very case. The order of the Wealth-tax Officer in its material part records this :

"The assessee had extensive zamindary properties which were vested in the Government under the Estates Acquisition Act of 1953. In the said Act the assessee is to receive compensation partly in cash and partly in non-negotiable bonds. Such right to receive the compensation constitute wealth. The assessee's representative objects to the inclusion of this compensation on the ground that the amount receivable has not been finally determined and not known when the amount would be paid. This objection cannot be entertained as the right to receive compensation remains with the assessee and the amount of compensation can be determined with reference to the Estates Acquisition Act. As the claim filed by the assessee before the compensation officer have not been disclosed and there is no material before me from which it can be ascertained what would be the compensation money receivable by the assessee, I, on the basis of the agricultural income determined by the Agricultural Income-tax Officer as per his order, dated 28th November, 1956, estimate the income at Rs. 15,00,000, and therefrom value the right to receive compensation at Rs. 32,00,000."

The big issue unquestionably then is that this land to begin with is agricultural land which has been expressly excluded by section 2(e) of the Wealth-tax Act as forming part of the assets in the scheme of the Wealth-tax Act, but the revenue authorities contend that by a statutory provision a "new kind of property", described as right to receive compensation, has been created independently of all concepts of agricultural land and its exemption. Therefore, they contend that this "right" has become assessable by a matter of interpretation and inference from the combined operation of the West Bengal Estates Acquisition Act and the Wealth-tax Act. From the point of taxing law, it is a question of grave import. Before we proceed to discuss the implications of the different arguments upon this point it will be desirable to clear the preliminary ground by noticing some of the cases on which reliance has been placed by the counsel appearing for the revenue.

The first case on which reliance was placed is V. Chandramani Pattamaha Devi v. Commissioner of Wealth-tax [1967] 64 ITR 147 (AP), the decision of a Division Bench of the High Court of Andhra Pradesh. The ratio of the decision is that the balance of compensation payable under the Madras Estates Abolition Act, 1948, to a person whose estate has been abolished under the Act is an asset which is liable to be assessed to wealth-tax, even though the exact amount of compensation has to be ascertained and paid in future. It should be noted that there in fact an advance payment of Rs. 2,20,000 had already been made to the assessee by way of compensation. The argument in that case naturally turned on the particular provisions of the Madras Estates Abolition Act, 1948, which are not in pari materia with the West Bengal Estates Acquisition Act and its specific scheme and provisions. This decision also turns on the question of what is "debt" and whether such compensation would be regarded as a "debt" payable by the Government to the person whose estate has been acquired. Many decisions were discussed there to find the meaning of the word "debt" but they were almost all concepts derived from common law and not from taxing law, as, for instance, Webb v. Stenton [1883] 11 QBD 518, 527, which was an instance of garnishee proceeding by which a judgment-creditor attached a judgment-debtor's share in the income in the hands of the trustees. Celebrated definitions of the word "debt" were noticed there such as those of Lindley L.J. saying : "A debt is a sum of money which is now payable or will become payable in the future by reason of a present obligation, debitum in praesenti, solvendem in futoro" or Fry L.J. and of Brett, Master of the Rolls. The Andhra Pradesh High Court relied also on a decision of the Full Bench of this court in Banchharam Majumdar v. Adyanath Bhattacharjee [1909] ILR 36 Cal. 936 (FB), at 941, where Jenkins C.J. observed :

"A debt is a sum of money which is now payable or will become payable in future by reason of a present obligation. "

And where Mookerjee J. observed :

"That a debt was no less a debt because it had not yet matured, if it would certainly become payable in the future."

The other case on which the Andhra Pradesh High Court relied is the Supreme Court authority in Sassoon (E.D.) & Co. Ltd. v. Commissioner of Income-tax [1954] ITR 27, 51; [1955] 1 SCR 313 (SC), where the Supreme Court, dealing with the question when managing agency commission became payable to the managing agents of a company, observed as follows :

"If the assessee acquired a right to receive the income, the income can be said to have accrued to him though it may be received later on its being ascertained. The basic conception is that he must have acquired a right to receive the income. There must be a debt owed to him by somebody."

Finally, reference is also made to the well-known decision of Dawson v. Preston (Law Society, Garnishee [1955] 3 All ER 314 (QB) ).

It will not be necessary to say anything more on this decision except that the Andhra Pradesh High Court decision in V. Chandramani Pattamaha Devi v. Commissioner of Wealth-tax [1967] 64 ITR 147 (AP)was based on the Madras Estates Abolition Act, 1948, which we have said is not in pari materia with the West Bengal Estates Acquisition Act and, secondly, it is not an authority on the points indicated and argued in the instant reference before us.

The next decision on which reliance was placed for the revenue is Sardar C.S. Angre v. Commissioner of Wealth-tax [1968] 69 ITR 336 (MP). This authority holds that the right to compensation for the resumption of a jagir under the Madhya Bharat Abolition of Jagirs Act, 195, arose on the date of resumption even though the compensation was payable in ten annual instalments, that compensation under that Act was a debt due on the date of resumption, and that the annual instalment which fell due after the valuation date should be included in the net wealth of the jagirdar for the purpose of assessment of wealth-tax. This decision followed the Andhra Pradesh High Court decision discussed above. This case is distinguishable by reason of the fact that the Jagirs Act, there considered, is not in pari materia with the West Bengal Estates Acquisition Act. Dixit C.J., delivering the judgment in that case, observed at page 340 :

"Now, if the relevant provisions of the Jagirs Act are examined, it will be seen that the compensation amount payable to an ex-jagirdar in respect of resumption of his jagir is a certain sum of money payable to the jagirdar in the future by reason of a present obligation. The payment of compensation is in no way dependent upon the happening of any contingency. "

The finding in that case, also by Dixit C.J., which distinguishes the present reference before us, can be seen at page 341, where he observed as follows:

"It will be seen from these provisions that when the assessee's jagir was resumed, he became entitled to receive under section 8(1) of the Jagirs Act compensation laid down in Schedule 1. This compensation amount became due to him under sub-section (2) of section 8 from the date of resumption. The compensation amount was, however, made payable not on the date of resumption of the jagir but in maximum ten annual instalments. There thus arose a right in favour of the assessee to receive compensation on the date of resumption itself ..."

This finding of fact, in our opinion, distinguishes the Madhya Pradesh decision from the present reference before us. Here, in the present reference, this is not a sum "certain". It may be observed also that at page 342 of that report it has been said :

"As this asset of unpaid compensation instalments is a "cash asset", the question of determining its market value clearly does not arise. Section 7 of the Act speaks of the determination of the market value of any asset other than cash."

Now, this is a consideration which is absent in the instant reference before us and quite a good deal of argument has been advanced from the Bar on this aspect of the problem which we shall presently discuss.

The third case on which reliance was placed by the revenue authorities is one reported in the same volume under the title Pandit Lakshmi Kant Jha v. Commissioner of Wealth-tax [1968] 69 ITR 545 (Pat.). That case came up under the Bihar Land Reforms Act holding that as soon as the estate of an ex-proprietor vested in the Government under the provisions of the Bihar Land Reforms Act, the proprietor was entitled to receive compensation though the date of payment of the compensation and the manner of such payment had been left to the discretion of the State Government. In holding so, this authority was following the decision in Maharajkumar Kamal Singh v. Commissioner Of Wealth-Tax. [1967] 65 ITR 460 (Pat.) , a previous Bench decision of the Patna High Court. There was one more decision reported in the same volume under the title Vadrevu Venkappa Rao v. Commissioner Of Wealth-Tax, A.P* [1968] 69 ITR 552 (AP) , on which reliance was placed for the revenue. This authority decided that the amount of compensation payable to the assessee under section 54A of the Madras Estates Abolition Act was part of taxable wealth under the Wealth-tax Act. This decision only followed the previous Andhra Pradesh High Court decision in Chandramani's case 's case (supra) . These cases are to be distinguished for the same reasons and for the same grounds which we have already indicated with respect to the other decisions just mentioned.

Mr. Nanda for the assessee has also taken us through the difference between the Bihar Land Reforms Act and the West Bengal Estates Acquisition Act in order to distinguish these decisions. He has drawn our attention to the differences in the preamble of the two States statutes and also the impact of acquisition not merely on proprietors and tenure-holders, as in the Bihar Act, but also on ryots, under-ryots and intermediaries under the West Bengal Act. He has also distinguished the Bihar statutory scheme of compensation under the Bihar Act and specially under sections 23 and 32 thereunder. It would be unnecessary to discuss these different statutes for we have already observed that they are not in pari materia with the West Bengal Estates Acquisition Act.

Reliance was next placed on the decision of Kesoram Cotton Mills Ltd.… v. Commissioner Of Wealth Tax, Calcutta…. [1963] 48 ITR 31 (Cal.), a Division Bench decision of this court. This decision, however, was not on the right to compensation under the West Bengal Estates Acquisition Act and whether it could be a species of wealth under the Wealth-tax Act. It is important, however, to note that in that decision G. K. Mitter J. observed at pages 43-44 :

"All liabilities are not debts and for the purposes of section 2( m) it is only the liabilities which have ripened into ' debts owing ' that can be taken into account. To merit deduction under section 2(m), the liability must not only be a debt but one solvendum in praesenti. A debt accruing is not within the section. "

The next case to which reference was made by the learned counsel for the Commissioner is Maharajkumar Kamal Singh v. Commissioner Of Wealth-Tax. [1967] 65 ITR 460 (Pat.) . There the assessee's estate vested in the State of Bihar under the Bihar Land Reforms Act, 1950, and he was held to be entitled to compensation under the said Act. The Tribunal held in that case that the right to receive compensation under the Bihar Act was an asset and its market value had to be estimated as provided under section 7(1) of the Wealth-tax Act. The decision of the Patna High Court was :

"(1) That the right to receive compensation was one relating to property and, hence, fell within the definition of 'asset' in the Wealth-tax Act, and (2) its value had to be computed for inclusion in the net wealth. "

There also the basis of calculation for wealth-tax valuation was the agricultural income taxes paid on the assessee's zamindary income. It must be emphasised here again that the assessee there admittedly received interim compensation of Rs. 41,000 from the State of Bihar and it is expressly said by the learned judge at page 463 :

"That pre-supposes that the approximate amount of compensation payable to the assessee must have been arrived at according to section 33 of that Act. "

We cannot say the same thing in the instant reference before us. This was clearly a distinctive feature and fact (sic) from the present case. This Patna decision is, therefore, not only distinguishable on the ground that the scheme of the Bihar Act is different from the scheme of the West Bengal Act but also on the ground of facts indicated. These are the main cases on which reliance was placed by the learned counsel for the revenue authorities on this point.

While another set of cases and authorities were cited on behalf of the revenue, in this second group of cases, the learned counsel for the revenue, relied on the Supreme Court decision in Commissioner of Income-tax v. Kunwar Trivikram Narain Singh [1965] 57 ITR 29 ,32; [1965] 3 SCR 700 (SC). The point on which this case was cited by the revenue is that the source of income in that case was the arrangement arrived at in 1837 and the income was derived there from that arrangement and not from land and was, therefore, not agricultural income within the meaning of section 2(1)(a) of the Income-tax Act, 1922. The ratio for which this citation was made appears at page 32 of that report, where the observations of Shah J. were quoted as saying:

"Because the annual allowance is equal to a fourth share of the net revenue of the mahals, the right of the respondent does not acquire the character of an interest in land or in land revenue. Under the arrangement, the entire land revenue was to be collected by the Government and in the collection Har Narain Singh and his descendants had no interest or obligation. As a consideration for relinquishing the right to the land and the revenue thereof, the respondent and his ancestors were given an allowance of Rs. 30,612-13-0. The allowance was in a sense related to the land revenue assessed on the land, i.e., it was fixed as a percentage of the land revenue; but the percentage was merely a measure, and indicated the source of the right in lieu of which the allowance was given."

The facts of this decision in the case of Commissioner of Income-tax v. Kunwar Trivikram Narain Singh's case (supra)are relevant for understanding the ratio and the principle enunciated by it. There the respondent was a Hindu undivided family descending from Babu Ausan Singh to whom was given the Jagir of Parganas Payedpore and Bhittery in perpetuity. In 1796 a dispute arose between Babu Ausan Singh and his zamindars, which ended in 1837 by a compromise between the British Government and the then jagirdar, whereby the Government granted a pension to the jagirdar and his heirs in perpetuity, the quantum of pension being calculated on the basis of \ th of the net revenue collection of the jagir. The question was, therefore, whether the amount received by the respondent during the relevant period on account of pension was agricultural income in his hands. The decision was that it was not so on those facts. The present case before us, however, is not of a treaty or an arrangement or a compromise between the parties and contestants, but of a compulsory acquisition of the estates under the West Bengal Estates Acquisition Act of the lands and specially agricultural land in this case, belonging to the intermediary.

The next case cited for the revenue was the Privy Council decision of Commissioner of Income-tax v. Raja Bahadur Kamakshya Narain Singh [1948] 16 ITR 325 (PC), holding interest on arrears of rent payable in respect of land used for agricultural purpose is not agricultural income within the definition of the then Income-tax Act. On this basis the argument for the revenue is that the compensation payable in respect of acquisition of agricultural land or zamindary is not agricultural income and, therefore, was not excluded from the assets for the purpose of calculation of net wealth of the assessee under the Wealth-tax Act.

The third group of cases relied on for the revenue raises the question of the saleability of the property in open market as the basis of valuation under section 7 of the Wealth-tax Act because the point has been argued in this case that this right to compensation cannot at all be valued under section 7 of the Act. This argument requires analysis. The test under section 7 of the Wealth-tax Act is the price which, in the opinion of the Wealth-tax Officer, this right to compensation would fetch if sold in the open market on the valuation date. The first case cited by the revenue on this point is Commissioners of Inland Revenue v. Crossman [1937] AC 26 2 EDC 537 (HL), a decision of the House of Lords. The House of Lords held that the value of the shares in the case for the purpose of estate duty was to be estimated at the price which they would fetch if sold in the open market, an expression which is similar in its language as under section 7 of the Wealth-tax Act here. It was held in that decision that the restrictions relating to the alienation and transfer of shares of the company did not prevent such class of property with restricted rights of transfer or sale from being valued in the open market. The second case on this point cited for the revenue was Commissioner of Wealth-tax v. Purshottam N. Amersey [1969] 71 ITR 180 (Bom.) . A Division Bench of the Bombay High Court in that case came to the conclusion that the definitions of "asset" in section 2(e) of the Wealth-tax Act and of "net wealth" in section 2(m) of the said Act were very comprehensive and all assets were included in the net wealth by the very definition saying "property of every description, movable or immovable". The ratio of the case, inter alia, was that the mere fact that the property was not capable of being transferred is not a consideration which ought to prevail and the Tribunal there committed an error in that respect as it considered the actual position in the actual market, whereas upon the statute what they should have considered is, assuming a hypothetical market, what would be the price if the interest was sold. In that Bombay decision the court came to the conclusion that the assessee was entitled to raise the question that his share and that of his wife in the trust fund were indeterminate and unknown and that, therefore, having regard to the provision of section 21(4) the revenue department could only assess the trustees and not the assessee. The main distinguishing feature of the decision from the instant reference before us is that it was a case of a trust created by parties or their predecessors and concerning a life interest, but it is not so in the instant reference before us. The importance of this distinction will appear later when we consider this point later in this judgment.

The third case in this group cited for the revenue is Ahmed G. H. Ariff v. Commissioner of Wealth-tax (19) Since reported in [1970] 76 ITR 471 (SC) , in Civil Appeal Nos. 2129-32 of 1968 in the Civil Appellate Jurisdiction whose judgment is yet unreported, laying down the principle of open market test as a notional concept. But there again the distinctive point between that case and the instant reference before us is that it was again a case of trust deed under the Mohamedan law by the settlor governed by the Hanafic school of law who created a wakf and the question was whether, on the facts and circumstances of that case, the right of the assessee to receive the specified share of the net income from the wakf estates was an asset, the capitalised value of which was assessable to wealth-tax. It was not a case of statutory acquisition of agricultural land liable to agricultural income-tax.

The fourth case in this group of authorities cited for the revenue is Narayana Gajapathiraju v. Revenue Divisional Officer, Vizagapatam [1939] LR 66 IA 104; AIR [1939] PC 98 102, 106, a decision of the Privy Council. That was a case under the Land Acquisition Act. The ratio of that decision is that the owner is entitled to be paid the value to him of the potentiality and the valuing officer under the Land Acquisition Act must ascertain the value of the potentialities of the land, even when the only possible purchaser of the potentialities is the authority purchasing under powers enabling compulsory acquisition. There the Judicial Committee of the Privy Council was considering among other points section 23 of the Land Acquisition Act which provided that in determining the amount of compensation to be awarded for land acquired under the Act, the Privy Council expressed the view that the court should take, inter alia, certain considerations into account, such as market value of the land at the date of publication of the declaration and other factors. The principle which Lord Romer enunciated at page 115 of the report is that it is established by numerous authorities that the "land is not to be valued merely by reference to the use to which it is being put at the time at which its value has to be determined but also by reference to the uses to which it is reasonably capable of being put in the future." Again, this case deals with land acquisition which has its own scheme for acquisition and provision for compensation stated in that statute. But the celebrated passage of this authority should not be missed at pages 124 and 125, where Lord Romer observed as follows :

"If and so far as this means that the value to be ascertained is the price that would be paid by a willing purchaser to a willing vendor, and not the price that would be paid by a 'driven' purchaser to an unwilling vendor, their Lordships agree. But so far as it means that the possibility of the promoter as a willing purchaser being willing to pay more than other competitors, or in cases where he is the only purchaser of the potentiality, more than the value of the land without the potentiality is to be disregarded, their Lordships venture respectfully to differ from the learned judge. For these reasons, their Lordships have come to the conclusion that, even where the only possible purchaser of the land's potentiality is the authority that has obtained the compulsory powers, the arbitrator in awarding compensation must ascertain to the best of his ability the price that would be paid by a willing purchaser to a willing vendor of the land with its potentiality in the same way that he would ascertain it in a case where there are several possible purchasers........."

Here again, this case is distinguished on the ground that it was not concerned with a sale, if possible, of a right to compensation under the West Bengal Estates Acquisition Act.

The last of the cases in this series cited for the revenue was another decision of the Judicial Committee of the Privy Council in Maori Trustee v. Ministry of Works [1959] AC 1 (PC)following the previous decision of the Judicial Committee just cited.

Broadly speaking, this concludes the review of the case law and the authorities cited for the revenue in support of its contention that a right to compensation, in the facts and circumstances of the case, under West Bengal Estates Acquisition Act, is an asset and is a part of the net wealth of the person whose property has been acquired and attracts the wealth-tax under the Wealth-tax Act. We have carefully studied and scrutinised these numerous authorities. None of them is a direct decision or authority on the point that arises for determination in the instant reference before us. The statutes discussed in those authorities are different from the statutes with which we are concerned. The principles discussed in those authorities are of general nature which will have to be studied in the light of the actual provisions of the West Bengal Estates Acquisition Act in this case read with the Wealth-tax Act. Analogies are misleading in taking a decision in this respect. Authorities on interpretation of different statutes are not necessarily authorities in interpreting other statutes even though there may be seeming similarities but which may contain many distinctions having regard to their different contexts and purposes. The decision in this reference, according to us, must depend on the actual interpretation of the relevant sections of the West Bengal Estates Acquisition Act and the Wealth-tax Act. That is what we propose to do, no doubt bearing in mind the decisions cited above and their possible bearing on our interpretation in this case.

The first principle to emphasise in this reference is that there can be no equity about a tax and no presumption about a tax. There is not room for any intendment or inference. Either the property comes within the tax or it does not. It is unnecessary to discuss this basic canon of construction for it is well-settled by such leading decisions as Cape Brandy Syndicate v. Inland, Revenue Commissioners [1921] 12 TC 358 (CA), approved by the House of Lords in Canadian Eagle Oil Co. Ltd. v. King [1946] AC 119; [1945] 27 TC 205 248 (HL) and by the Supreme Court in Fernandez v. State of Kerala [1957] 8 STC 561; AIR [1957] SC 657. We shall, therefore, address ourselves in the first instance to the taxable base for the wealth-tax.

The pre-eminent question is: what is it on which the wealth-tax is attempted to be imposed in the present reference ? The property is said to be the right to compensation under the West Bengal Estates Acquisition Act. Jurisprudence has given many definitions of property as a "bundle of rights", tangible and intangible, movable and immovable, and in diverse other ways. We are not concerned with the general definition of property in its juristic connotation in this context. Our immediate concern is what is the nature of this right to compensation on which this wealth-tax is being imposed and to consider whether that is a kind of property or asset within the meaning of the Wealth-tax Act.

The first step in this construction is to find out from the West Bengal Estates Acquisition Act what is this right to compensation which is said to be "the property" on which wealth-tax is imposed in this case. In the first instance, is it a "right" at all ? or, is it a mere chance or expectancy, a possibility which may or may not mature ?

The argument for the revenue seemed to assume that it was a legal right complete in itself. This, in our view, is the basic fallacy in the arguments for the revenue. If this is at all any kind of a right, it appears, on an analysis of the different sections of the West Bengal Estates Acquisi tion Act, that it is at best a very inchoate right, as the Tribunal points out that the right to compensation does not arise at all until the requirements under section 23 of the West Bengal Estates Acquisition Act are satisfied. What are the requirements under that section ? First, there must be the "final publication" of a compensation assessment roll under section 21 of the West Bengal Estates Acquisition Act. It is that final publication which, expressly by the statute, is considered to be the "conclusive evidence" that the said roll has been duly made and that every entry in such rolls so finally published shall be conclusive evidence of the matters referred to in such entry. This final publication of the compensation assessment roll is the crucial event on which the possible future right to compensation hangs.

Now, this compensation assessment roll is a very significant instrument under Chapter III of the West Bengal Estates Acquisition Act. The compensation officer first prepares a compensation assessment roll under section 14 of the Act on the basis of the record-of-rights prepared and finally published under Chapter V and it must contain particulars about gross income and net income of each intermediary from all estates and interests within the year, the amount of compensation payable in accordance with the provisions of the Act and such other particulars as may be prescribed. Then within a month of publication of that roll under section 14 a period of objection follows. The objections are to be heard and judicially or quasi-judicially decided as provided under the Act. It is needless to point out that, during the objection period, even appeals to the High Court are provided as would be seen from section 20 of the Act. Then comes the final publication of the compensation roll as provided in section 21; so, that is the first condition to be satisfied—the final publication of compensation assessment roll. Plainly enough and admittedly, this final publication of the compensation assessment roll has not taken place in this case for the assessee.

It is only after such final publication of the compensation assessment roll that the compensation officer's duty is to proceed to make payment of the compensation to the intermediary. That is the requirement. But here the fact remains that this compensation roll has not been prepared as yet far less published and the compensation officer has not, therefore, necessarily proceeded to make payment of any compensation to the intermediary-assessee. On a plain reading of the situation, therefore, there is no right to compensation as yet.

No doubt, immediately on the notification under section 4 of the West Bengal Estates Acquisition Act, under Chapter II, the assessee's rights vested in the State. But his vesting under the scheme of the West Bengal Estates Acquisition Act does not immediately create any right to compensation. There are many steps which have to be taken before that right to compensation arises. For this purpose, section 5 of the Act may also be seen. Indeed, section 7 of the Act says that even all arrears of land revenue, cesses, taxes and other impositions by the State due from any intermediary prior to the date of vesting will continue to become recoverable in the same manner as before against the intermediary. The amount of compensation is also thus wholly uncertain and indeterminate. The next Step is also vital and significant and, that is, when the Collector shall take charge of the estate and interest of the intermediary under section 10 of the West Bengal Estates Acquisition Act, by which the Collector may by written order require the intermediary to hand over or deliver possession at a particular date or time. Non-compliance with the Collector's order is provided with penalty provided in section 11 of the Act. The other processes begin thereafter for assessment and payment of cempensation and the final stage is reached, as indicated, with the publication of the compensation assessment roll under section 23.

In this view of the interpretation of the relevant sections of the West Bengal Estates Acquisition Act and the scheme provided, there is no right yet in the assessee to compensation; in the facts and circumstances of the case, and the Tribunal was right in coming to the conclusion accordingly.

We are not to be misunderstood as holding that a right to compensation under no circumstance cannot be property or assets. Certainly, such a right can be an asset or property in appropriate circumstances. The appropriate circumstances are that it must be a legal right, not inchoate, vague, indeterminate, problematical, contingent, and a mere possibility or expectancy. What we are holding is that it is not so on the present facts before us under the scheme and the sections of the West Bengal Estates Acquisition Act. After the final publication of the compensation assessment roll when the compensation becomes certain or where the ad interim payments of compensation are made under section 12 of the West Bengal Estates Acquisition Act this chance or expectancy for compensation will mature or rather materialise into a legal right to compensation which can then come within the meaning of wealth or asset under the Wealth-tax Act.

We shall now closely examine in greater detail if this inchoate or immature right to a possible compensation can at all be an asset under section 2(e) of the Wealth-tax Act. In this branch of the argument there are many steps which are to be noticed. section 2(e) of the Wealth-tax Act says :

"'Asset' includes property of every description, movable or immo vable, but does not include......"

A list follows saying what it does not include. But before we come to that list of exclusion under section 2(e) of the Act we shall pause for a moment on the first part of the definition. The question is, if asset includes "property of every description", then only, why was the amplitude qf that definition qualified by the words "movable or immovable" which followed. Naturally, these words, "movable or immovable", are qualifying words which necessarily restricted the plenitude of the meaning of "property of every description" Was it intended then that it was only property considered from the angle of vision of whether it is movable or immovable property that is included and not properties which do not ordinarily answer the test of movability or immovability such as intangible right or incorporeal rights. This point apparently does not seem to have been decided directly in any of the decisions. Almost all the decisions appear to have taken for granted and are satisfied with the words "property of every description" and come to the conclusion that, therefore, all properties must be included whatever their nature and have almost treated the expression " movable or immovable" appearing in that definition as otiose or meaningless appendage. The base of tax in a taxing statute should, in our view, be clearly indicated and not left to mere inference. If property of other description was really intended to be "asset" within the meaning of the Wealth-tax Act the simplest thing for Parliament would have been to say so and stop at the expression "property of every description".

The next step is the first exclusion under section 2(e ) of the Wealth-tax Act. Now, section 2(e)(l)( i) says this :

".... does not include in relation to the assessment year commencing on the 1st day of April, 1969, or any earlier assessment year, agricultural land, etc."

Obviously, therefore, "agricultural land" as such was expressly excluded from the ambit of "assets" under the Wealth-tax Act.

Now, what is "agricultural land" is not defined under the Wealth-tax Act. But it is defined by section 2(b) of the West Bengal Estates Acquisition Act which provides that "agricultural land means land ordinarily used for purpose of agriculture or horticulture and includes such land that may be lying fallow for the time being" Again, by section 2(1) of the Bengal Agricultural Income-tax Act, 1944, it is provided that:

"Agricultural income means—

(a) any rent or revenue derived from land which is used for agricultural purposes and is either assessed to land revenue in a State or is subject to a local rate assessed and collected by officers of the Government as such ;
(b) any income derived from such land by—

(i) agriculture, or
(ii) the performance by a cultivator or receiver of rent-in-kind of any process ordinarily employed by a cultivator or receiver of rent-in-kind to render the produce raised or received by him fit to be taken to the market, or
(iii) the sale by a cultivator or receiver of rent-in-kind of the produce raised or received by him in respect of which no process has been performed other than a process of the nature described in paragraph ( ii) of this sub-clause ; and

(c) any income derived from any building owned and occupied by the receiver of the rent or revenue of any such land, or occupied by the cultivator or the receiver of the rent-in-kind of any land with respect to which, or the produce of which, any operation mentioned in paragraphs ( ii) and ( iii) of sub-clause ( b) is carried on."

The fact in this case remains that the lands in question have been assessed to the agricultural income-tax thereby making it clear that the lands under consideration in the instant reference are all agricultural lands. A Division Bench of this court in Khantamayee Debya v. Srimathi Rukmini Debya [1944] 48 CWN 759; SIR [1944] Cal. 421, in considering the expression "agricultural land" in item No. 21 of List 2 of the Seventh Schedule of the Government of India Act, 1935, discussed this particular expression and came to the conclusion that agricultural land "includes any interest therein whether that of a zamindar or tenure-holder or under-tenure holder or riayat or under-riayat". The learned counsel for the assessee, therefore, contends that the expression "agricultural land" is not necessarily the soil itself but also any interest which should include even a complete legal right to compensation arising by virtue of its acquisition. In its broadest implication that contention of the assessee cannot be accepted and there are decisions, already discussed, which would indicate that in appropriate circumstances the tangible property may be considered independently and dissociated from a right to compensation arising from it.

But, even if the assessee's contention is not to be accepted broadly, there are other implications arising from the scheme of the West Bengal Estates Acquisition Act which require examination. Before proceeding to such examination, a reference may, at this point, be appropriately made to the decision of V. Chandramani Pattamaha Devi v. Commissioner of Wealth-tax [1967] 64 ITR 147 (AP) which has already been noticed, where this contention was mentioned, at page 148, in the observation of Gopalakrishnan Nair J. to the effect:

"Regarding the advance payment on account of compensation under section 54A of Act XXVI of 1948, the assessee contended that as the Chemudu Estate taken over by the Government under the Act consisted of agricultural lands, the amount paid as part compensation must be held to represent agricultural property which was to be excluded in computing the taxable wealth."

But this point was not pressed as will appear from the learned judge's observation at page 150 :

"Nor has he pressed the contention that the amount of compensation paid or payable to the assessee under the Act, XXVI of 1948, must be treated as representing agricultural land and, therefore, excluded from consideration".

The result is that this point, although raised in that case, was not pressed and that decision, therefore, is not an authority on the point which is now under consideration by us.

The basic and root question in this connection is that the right to compensation may be a property under section 2(e) of the Wealth-tax Act, provided certain conditions are fulfilled. The first condition as indicated above is that it must be a legal "right" and not a mere chance or expectancy or a contingency dependent on such events as the preparation and final publication of the compensation assessment roll or that no compensation becoming payable after deductions. In other words, it must be a legal right which can be legally or juristically considered as property or wealth or asset with their full implication. The editor of the 12th edition of Salmond on Jurisprudence discussed the significant distinctions between perfect and imperfect rights, proprietary and non-proprietary rights, and vested and contingent rights in pages 233 to 245 of that edition. Having regard to the sections of the West Bengal Estates Acquisition Act, to which reference has already been made, we are satisfied that there is no legal right to compensation in the facts and circumstances of the case in the instant reference. The first condition, therefore, of a right is not satisfied in this case.

The second condition is that this right must mean that at least some compensation must be payable in any event. Now the point is that under the scheme of the West Bengal Estates Acquisition Act, in the instant reference, no compensation may ultimately be payable at all and nothing may be due to the assessee. In considering this aspect of the problem the first thing to remember is that this West Bengal Estates Acquisition Act began its career by providing such limits as 2, 3, 5 or 8 years for payment of compensation but as it stands now it has no longer any time limit and the Act, in its present state, does not indicate that compensation is payable within any number of years. The time for payment of any compensation is, therefore, now indeterminate and there is no statutory time within which it must be paid. That makes it in the first instance indeterminate. In the second instance, the scheme of the West Bengal Estates Acquisition Act, conclusively shows that nothing may be payable at all as compensation to the assessee. This point is illustrated by reference to section 7 which expressly provides that all arrears of land revenue, cesses, taxes and other impositions due from any intermediary shall remain recoverable from the assessee as provided therein, followed by section 16 laying down how the gross and the net income is to be computed for the purpose of preparation of compensation assessment roll where it will be found that by section 16(l)(b) that the gross income must be reduced by any sum payable or even deemed to be payable by such intermediary during the previous agricultural year as land revenue, cess or rent, if any, to the State Government and the average of all sums payable as taxes under the Bengal Agricultural Income-tax Act or the Indian - Income-tax Act. These deeming provisions for averaging make the sum itself vague and indeterminate, apart from the time which also is indeterminate as indicated above. It is only after the net income has been computed under section 16 of the West Bengal Estates Acquisition Act that the compensation officer shall proceed to determine the amount of compensation payable to the intermediary in accordance with the tables set out in section 17 of the Act. Now, it is quite on the cards that in many instances the arrears of land revenue, cess or tax or other impositions as mentioned above may eat up all the compensations so that the assessee receives nothing at all by way of compensation when the final compensation assessment roll is prepared. No doubt, the compensation in theory is calculated and it is from that compensation that these deductions are made. But the point remains that the compensation assessment roll itself, before it puts the amount of compensation, has to calculate the gross income and the net income with the deduction to find out what compensation, if any, is payable. Without juristic or legal hairsplitting, the fact remains that no compensation may be payable. This further supports the view that it is not a right to compensation, as is assumed, and that assumption is the basic logical fallacy in this case.

Pausing here for a moment, let us take stock of the legal and factual situation. Here then is an assessee whose agricultural land has been taken away from him because it is vested in the State and possession taken by the State. The assessee neither legally owns nor even physically possesses these lands. He has lost all use or enjoyment of such lands. He has not created any property by his own act which can be said to invite a tax. Normally, the basic concept of a tax is that the assessee or his representatives or predecessors-in-interest is responsible for the wealth or income or the property on which the tax is levied by the State. Normally, it is only property or wealth or income which the assessee acquires or inherits which is the subject of a tax on the ground that such acquisition or inheritance is rendered possible by the existence of an orderly State or Government. If the land was there as such with the assessee in this case, then the wealth-tax itself was completely exempt, as stated, on the ground that it was agricultural land. The State has taken away that property by compulsory statutory acquisition. It now says that has now created property for the assessee, which is the right to compensation apart from the compensation itself, which may or may not become payable and for which there is no time limit any more under the statute to pay and for which the basic conditions of publication or preparation of the final compensation assessment roll have not been fulfilled and where nothing has been paid as ad interim or other compensation in the meantime, although today in 1970, sixteen years have elapsed since the vesting took place in 1954. The plain contention of the State is that this property is created by the compulsory statutory acquisition for the assessee by giving him this curious, inchoate and indeterminate right to compensation which is contingent and problematic and on which the State claims to impose the wealth-tax. Add to this the prospect that if the tax is imposed on this so-called right then the assessee will keep on paying the tax year after year and may ultimately find that he cannot have any compensation at all when the computation and calculations are made under sections 16 and 17 of the West Bengal Estates Acquisition Act. These considerations, in our opinion, are repugnant to the basic concept of a taxing law. It is also repugnant, in our opinion, to the specific sections and scheme provided under the West Bengal Estates Acquisition Act. To tax in such circumstances is to tax by inference, by implication and by strained interpretation and should not be adopted. To do so would be to invent a kind of strange and curious species of "wealth" on which to pay wealth-tax.

We cannot avoid also, in this connection, making a reference to the argument by the learned counsel for the revenue that this so-called right to compensation has nothing to do with the exemption granted to the agricultural land, even though it is the acquisition of such exempted agricultural land which is supposed to give rise to this wealth-tax. Although the land notionally vests in the State under section 4 of the West Bengal Estates Acquisition Act, the entire scheme which we have illustrated by reference to the sections of that statute is to base the compensation on the agricultural income. Section 14 of the West Bengal Estates Acquisition Act expressly provides that the whole basis of the compensation assessment roll is the record-of-rights which are all agricultural in the present instance. The scheme of computation and calculation of the compensation provided under section 17 expressly and without any doubt are all referable to the net agricultural income arising out of this land. The compensation is stamped with notions of agricultural income and agricultural income-tax deductions. The principle of compensation as well as its formulation and computation are inseparably and integrally connected with agricultural land and agricultural income. The position then is that so long as the assessee had the lands before vesting, these were agricultural lands expressly excluded from the wealth-tax under the Wealth-tax Act. But according to the revenue authorities, this must still be liable to taxation as wealth by conversion of the exempted agricultural land into a right of compensation independently of the agricultural land. What are the revenue authorities trying to do in the present instance ? They are treating this alleged right to compensation, which is a misnomer for a legal right, as a kind of property which is an asset attracting wealth-tax under the Wealth-tax Act, and that wealth-tax is being computed on the basis, which is entirely hypothetical, notional and imaginary, of that very agricultural income-tax which he had to pay if the assessee had the use, enjoyment and the ownership of these agricultural lands which were excluded from the wealth-tax. So, because the State had compulsorily acquired these agricultural lands of the assessee, the State is supposed to have created by its acquisition a new kind of taxable property for the assessee, and, therefore, he goes on paying wealth-tax on the basis of agricultural income-tax of these very properties. This in our view is taxing indirectly what could not be taxed' directly. We are unable to accept these contentions of the revenue authorities.

Learned counsel for the revenue, here, wanted to apply which, in the absence of a better expression, we shall describe as the "doctrine of measure". It is contended on behalf of the revenue that although the compensation is referable to agricultural land and the agricultural income arising out of it and although such compensation is based entirely on the record-of-rights of such agricultural interest, yet this is not agricultural land but money. Indeed, it is and it is an ideal legal argument. Very resourcefully, learned counsel for the revenue tried to apply the observation of the Supreme Court in Commissioner of Income-tax v. Kunwar Trivikram Narain Singh [1965] 57 ITR 29 ; [1965] 3 SCR 700 (SC), which we have already quoted elsewhere and specially the observations at page 32, which we shall repeat, viz.:

"The allowance was in a sense related to the land revenue assets on the land, i.e., it was fixed as a percentage of the land revenue ; but the percentage is merely a measure, and indicated the sources of the right in lieu of which the allowance was given. "

Therefore, the learned counsel for the revenue contends that the compensation payable under the West Bengal Estates Acquisition Act refers to the percentage of the land revenue only as "merely a measure", but the measure does not give it the stamp and the quality of agricultural land to the compensation. In other words, the compensation is not agricultural land but monetary. It is plain that the learned counsel for the revenue was taking the observations of the Supreme Court torn from the context in which they were made. It would be recalled that we were discussing this observation when we analysed the judgment that this was a case where the source of the income was a matter of arrangement or compromise between the British Government and the then jagirdar in 1837 by which in lieu of the jagir the Government agreed to pay the pension and in that context it was said that the pension ceased to retain its character of land revenue or agricultural land and only became a compensation payable under a contract or a compromise. The measure treated here in this scheme of the West Bengal Estates Acquisition Act is not only a measure to use a Shakesperean expression "measure for measure". In other words, the inherent implication is that this agricultural land expressly exempted from wealth-tax under the Wealth-tax Act is by the round about process, suggested by the revenue authorities, made to lose its character of agricultural land under this doctrine of measure, in spite of the fact that for the valuation of this newly created "wealth" or "asset" the base of agricultural income-tax operates. In one breath the State says that it is not agricultural land any more or else it could not tax, and in the other breath says that the computation of the tax will continue to be on the basis of the fixation as though he is still paying agricultural income-tax on this very land, a process by which the Wealth-tax Officer has computed the wealth-tax in this very case. We do not think that the doctrine of measure was intended to save or serve such a situation for the revenue.

This brings us to the next vexed question of valuation of such wealth. The embarrassment of the revenue authorities in the present case is plain from the fact that at one time the valuation of this alleged right to compensation is said to be Rs. 32,00,000 for each of the three years according to the Wealth-tax Officer, but, which according to the Appellate Assistant Commissioner, becomes very much smaller and comes to only Rs. 3,25,000 for each year. Behind this yawning disparity lies an unexpressed confusion that such a wealth was not intended at all to be valued or taxed either under section 2(e) of the Wealth-tax Act or under section 7 of the Wealth-tax Act.

Now, section 7 of the Wealth-tax Act provides the method of determining the valuation of an asset under that Act, and, inter alia, it provides :

"The value of any asset, other than cash, for the purposes of this Act shall be estimated to be the price which in the opinion of the Wealth-tax Officer it would fetch if sold in the open market on the valuation date. "

This is well-settled law that the open market may be a hypothetical market and the price may be a notional and hypothetical price. The physical impossibility of either determining the price or selling the right in the open market will not be a deterrent for valuing the asset for the pur poses of the Wealth-tax Act. It will be no use to cite authorities on this point. But here the fundamental question arises, whether an indeterminate, inchoate or problematical right to compensation under the West Bengal Estates Acquisition Act can at all be sold even in an imaginary or even hypothetical market. Here is not a case like restrictions on sales by act of parties, as for instance, any share or trust deed or wakf deed for which the several authorities as Commissioners of Inland Revenue v. Crossman [1937] AC 26; EDC 537 (HL), Com missioner of Wealth-tax v. Purshottam N. Amersey [1969] 71 ITR 180 (Bom.) and Ahmed G. H. Ariff v. Commissioner of Wealth-tax [1970] 76 ITR 471 (SC) , have been cited and which we have already discussed. The compensation provided for in the West Bengal Estates Acquisition Act is a compensation payable expressly to the intermediary. The point arises whether such a right to compensation, even if it could be called a right, is at all legally saleable or whether there is a legal disqualification at its inception for such a property to be sold which is not a mere matter of private arrangement for restricted sale with restricted rights either under articles of association relating to shares or under terms of a trust deed or otherwise by act of parties. Under the scheme in that statute as it then actually was at the time of the valuation date within the meaning of section 7 of the Wealth-tax Act, section 23(2)(b) expressly provided that the balance of compensation was to be paid only in non-negotiable and non-transferable bonds prior to its amendment in 1964. Also section 23 of the West Bengal Estates Acquisition Act expressly uses the word "the compensation officer shall in the prescribed manner proceed to make payment of the compensation to the intermediary who is entitled to such compensation in terms of the compensation assessment roll."

The statutory provisions in the scheme, therefore, indicate that this compensation is only for the intermediary and no one else and such right to compensation cannot be sold by him nor can it be imagined to be sold conceptually for the purpose of finding a price in a hypothetical market even under section 7 of the Wealth-tax Act. In Abdul Khaleque… v. Medaswar Hossain…. AIR [1967] Cal. 56, this right to compensation under the West Bengal Estates Acquisition Act was considered along with the question whether it could be sold under it. The observations made there at pages 60-61 are relevant on the point and are as follows :

"From the practical point of view I cannot see how a right to proceed against compensation money can itself be sold. There are enormous practical difficulties. A right to compensation is a total right under the West Bengal Estates Acquisition Act. In the first place, the final publication of the compensation assessment roll under section 21 read with the manner of payment of compensation under section 23 and sections 16 and 17 of the Act dealing with the gross and net income with its particular tables appears to indicate that this compensation depends ultimately on two major factors: (1) deduction of dues, and (2) gross and net income. Now, it may just be possible that in a particular case an intermediary who has his own dues to the State under sections 7, 8 and 9 of the Act may actually have no particular sum of money to his credit as compensation after deduction of the debts. What then is the concrete and tangible content of the so-called right to compensation which has been advertised in the sale proclamation in the mortgage decree in this case? The attempt to put a valuation on this right to compensation by valuing the three items of properties which were mortgaged is both illogical and unauthorised by the statute because the compensation is not relatable to separate items of properties, as such a person's right to compensation in respect of one item of property may be considerably influenced by his possessing the income from other items of properties. In that even the other items of properties and their incomes and their shares come into the picture of the calculation of the compensation money that the intermediary gets. That being so, it is not possible to separate the compensation only in respect of the mortgaged items of property. It would be grossly unfair and illegal to include the right to compensation in respect of other properties while selling the so-called right to compensation in respect of the mortgaged property. No such separation can be made in the scheme of compensation and its computation as envisaged and laid down in sections 14, 15, 16, 17, 19, 23 and 25 of the Act. To permit in such a case and in such a context, sale of the mere right to compensation which on the facts of this case itself is indeterminate, and when at the time the sale proclamation in 1956 was made, no compensation roll had even been prepared, would be to encourage speculation and trafficking in a new species of gambling. Such a right to compensation due to its vagueness may be bought up by a handful of persons throughout the State to promote rampant speculation and the purchasers would not know what actually they are buying nor the sellers would get the value which has any relation to the reality."

These observations were made in connection with a mortgage decree and a sale thereunder, and not under section 7 of the Wealth-tax Act. But they are relevant also for the purpose of examining how far such an asset like right to compensation, even if it be a right and even if it be an asset, could be valued. The authorities are now well settled that the difficulties of valuation would not exclude a property from being an asset under the Wealth-tax Act, because any imaginary or hypothetical market has to be contemplated. But the point is that here it is not merely difficulty in valuing but legal disqualification under the statute to sell it at all. That consideration raises the basic problem whether this was at all a kind of property or an asset which is contemplated to be taxed under the Wealth-tax Act. We have already shown the wide disparity among the taxing authorities in valuing such a right. It is not a question of one valuer differing from another. The whole principle, even including the principle of notional and imaginary market and price under section 7 of the Wealth-tax Act appears to be inapplicable in the present context of this instant reference.

There is yet one more consideration about the valuation under section 7 of the Wealth-tax Act which is not a mere difficulty in the process or mechanics of valuation but again springing from the basic incongruity indicated above. Now, under section 7, it is the opinion of the Wealth-tax Officer. He has got to exercise his opinion to find out the imaginary open market and discover the imaginary price available for such a right. But between the imagination and the reality there is a flagrant and unbridgeable conflict in law in the present case that needs to be examined more carefully. The right to compensation necessarily has to be regulated by the compensation payable. We shall assume that the contention of the revenue authorities is correct for the purposes of this branch of the argument that the right to compensation is different from the compensation itself. But then, in order to value even the right to compensation, it is necessarily to be influenced by certain considerations about the compensation payable. But then in order to see the probable or possible compensation payable under the West Bengal Estates Acquisition Act, it is not the opinion of the Wealth-tax Officer under the Wealth-tax Act but the opinion of the compensation officer under the West Bengal Estates Acquisition Act. The compensation remains payable by the compensation officer and the hierarchy of authorities expressly stated in the West Bengal Estates Acquisition Act, with express provisions as to how that compensation has to be arrived at and those provisions, of course, have nothing to do with going to any imaginary market to find out imaginary buyer for a legally, unsaleable right. No doubt, the Wealth-tax Officer under section 7 of the Wealth-tax Act values it for wealth-tax, a legal theory whereby he is entitled to value according to his opinion as best as he could form to find out such a price and such an open market for such a right. But is it not then asking him to do something which is legally impossible, and even imaginatively inconceivable ? His valuation may be entirely different from the valuation of the compensation by the compensation officer under the West Bengal Estates Acquisition Act. In other words, the result is that the Wealth-tax Officer's valuation of this right to compensation may be entirely different from the valuation of the compensation by the statutory compensation officer under the West Bengal Estates Acquisition Act. In other words, the same wealth notionally is carrying different values, one for the wealth-tax and the other for the compensation.

We cannot over-emphasize the fact and we repeat that compensation either interim or final when paid certainly becomes an asset, a part of the wealth and will attract wealth-tax under the Wealth-tax Act within the definition of asset in section 2(e) of the Wealth-tax Act and we also repeat that mere physical or other mechanical difficulties of valuing an asset will be no deterrent under section 7 of the Wealth-tax Act, so long it does not suffer from legal prohibition of being sold in real or imaginary open market. The Wealth-tax Officer will have to do as best as he can in this respect. Once the land or the right is computed in money either legally or physically, then that money unquestionably is asset attracting wealth-tax. The further fact that whether it is payable at once or payable in instalments or spread out for a longer number of years will not affect its chargeability or assessability to wealth-tax.

The learned counsel for the revenue submits that section 5 of the Wealth-tax Act lists the exclusion and this right to compensation or compensation itself is not one in the excluded list. We accept that argument but the difficulty there is that the exemption mentioned in section 5 of the Wealth-tax Act proceeds on the basic assumption that they are all assets within the meaning of section 2(e) of the Wealth-tax Act and are primarily liable to attract wealth-tax. It is, therefore, that section 5 excludes such " assets " from the net wealth of the assessee under the Wealth-tax Act. Section 5 of the Act listing exclusion of admitted assets cannot, therefore, be any index or guide to determine the more basic question of what is an asset within the meaning of section 2(e) of the Wealth-tax Act.

The argument from that point of view turns back and relates to the basic question whether this alleged right is at all an asset. The view that we are taking is that, in the facts and circumstances of this case before us and under the scheme of the West Bengal Estates Acquisition Act, it is not an asset as yet and it is not a right as yet in the instant reference. When it becomes a compensation whether as interim compensation or as final compensation then it becomes money or wealth or asset in the hands of the assessee and then the doctrine of measure will apply, for, then, it will be a computation or capitalisation and the fact that the agricultural land or agricultural income was involved in either calculating the compensation or in making the interim or final compensation will not qualify such money to be exempted from wealth-tax. But the mean process(sic) in which the problem now is, where agricultural land has been taken away, has vested in the State, but where the final compensation assessment roll has not been prepared and published and the compensation officer has not calculated the amount, if any, at all payable to the assessee, then this inchoate right is not yet a legal right which can be regarded as an "asset" within the meaning of section 2(e) of the Wealth-tax Act. Otherwise, the situation will be that the State can keep the property vested in it, divest the assessee, not pay any compensation, create an imaginary asset or imaginary wealth on which the assessee will continue to be liable to pay tax for a property for whose creation he was not responsible, a situation which, in our opinion, as we have said, is repugnant to the legal concept of a tax as well as to the specific provisions of the West Bengal Estates Acquisition Act and the Wealth-tax Act.

It is here again that we come back to the question of the method of determining the value of the asset under section 7 of the Wealth-tax Act. The difficulties of the valuation as contemplated under section 7 of the Wealth-tax Act in such a case, therefore, are not difficulties in the mechanism or process of valuation to find a hypothetical price in a hypothetical market but it relates back to the basic principle that this was not an asset under the Wealth-tax Act and, therefore, the application of the mechanism of valuation would also be not applicable to such an asset.

Before concluding we may make a brief reference to the concept of property and actionable claim referred to in the decision of the Tribunal. It will be recalled that section 2(e) of the Wealth-tax Act defines asset as including any "property of every description, movable or immovable". Section 3 of the Transfer of Property Act defines immovable property to say that it does not include standing timber, growing crops or grass. It is a negative definition. The Transfer of Property Act has no definition for immovable property. The General Clauses Act has a definition for immovable property to say "immovable property shall include land, benefits arising out of land and things attached to the earth". The General Clauses Act defines movable property to mean "property of every description except immovable property". The Registration Act defines movable property to include property of every description except immovable property. From this analysis it will appear that there is in law and jurisprudence no tangible and concrete definition of property, yet it is used in the widest and most generic legal sense. Section 6 of the Transfer of Property Act speaks of some of the properties which cannot be transferred at all. As for instance, the transfer of a mere possibility of a like nature as the chance of heir-apparent or where such transfer is opposed to the nature of the interest affected thereby or to a person legally disqualified to be a transferee. The Tribunal also came to the view that the Appellate Assistant Commissioner was wrong in holding that the assessee, in the facts and circumstances of this case, had an actionable claim on the valuation date which had a hypothetical market value under section 7 of the Wealth-tax Act. Actionable claims and their transfers are provided for in section 130 of the Transfer of Property Act. In the view that we have taken we uphold the decision of the Tribunal on that point and say that this alleged right is not an actionable claim. In that view also as an actionable claim includes future debts and as there can be valid assignment of a future debt like salary to become due or future rents we do not propose to enter into the nicety of the controversy about what is debt or not which are sufficiently discussed in some of the cases that we have discussed above.

On one point, however, we do not find ourselves in agreement with the view of the Tribunal where it said that the alleged right to compensation cannot be enforced because section 58 of the West Bengal Estates Acquisition Act was a bar. section 58 of the West Bengal Estates Acquisition Act only provides protection of action taken under that Act and says:

"No suit, prosecution or other legal proceeding shall lie against any person for anything which is in good faith done or intended to be done in pursuance of this Act or any rules made thereunder and that no suit or other legal proceeding, except as otherwise expressly provided under this Act, shall lie against the State Government for any damage caused or likely to be caused or for any injury suffered or likely to be suffered by virtue of any provisions of this Act or any rules made thereunder or by anything in good faith done or intended to be done in pursuance of this Act or any rules made thereunder."

This is the usual traditional proverbial immunity clause. The bar to the jurisdiction of the civil court, however, appears in section 46 of the West Bengal Estates Acquisition Act, but it will not be relevant for our purpose. Independently of section 58 and section 46, which in our view do not apply in the present reference, we come to the conclusion that it is not a legal right at all in the facts and circumstances of the case in the instant reference.

Mr. Panda, appearing for the assessee, at one stage submitted that under section 2(e) of the Wealth-tax Act, property of every description, movable or immovable, only meant tangible property and not intangible property and not rights arising from such property. In support of this contention, he tried to attract us by the word "located" in section 2(m) appearing therein, viz., " 'Net wealth' means the amount by which the aggregate value computed in accordance with the provisions of this Act of all the assets, wherever located, belonging to the assessee on the valuation date "etc. Therefore, he submits that location meant location of tangible property and not intangible property. We are unable to accept this proposition put forward on behalf of the assessee. Even in section 2(e) of the Wealth-tax Act and looking at the excluded list we find such properties as right to annuity, which also may not in that sense have a "location". We are inclined to the view that the word "located" in section 2(m) of the Wealth-tax Act has reference to the tax arising, for instance, under such sections as section 6 of the Wealth-tax Act dealing with the exclusion of assets and debts outside India for resident and nonresident assessees.

Learned counsel for the revenue has drawn our attention to Circular No. 2-D(W.T.) dated May 15, 1964, from the Central Board of Direct Taxes under the caption : "Valuation of the right to receive compensation on the abolition of zamindary estates, instructions regarding. "While these circulars under section 13 of the Wealth-tax Act bind all officers and other persons employed in the execution of the Wealth-tax Act, they do not bind this court nor have they any legal validity unless tested. In that circular, the indication is there that any right to compensation is an asset under all circumstances, a proposition to which we cannot give an unqualified assent in view of our findings and determination stated elsewhere in this judgment.

For these reasons, we answer the question raised in the statement of the case in the affirmative in favour of the assessee and we also answer the question, as reframed by us, in the negative holding that what has been attempted to be taxed in this case is not an asset within the meaning of section 2(e) of the Wealth-tax Act and also make this finding in favour of the assessee. There will be no order as to costs.

T.K. Basu J.—I agree.

Wealth-tax Act,