Wealth-tax treatment of receivables and accrued income: right to payment excluded, but accrued interest and rentals included in net wealth.

Under the Wealth-tax Act, a right to receive an amount from the State Government was considered in light of the charging concept of property "belonging to" the assessee and, following Supreme Court authority, was held not to be includible in net wealth. Accrued interest and rentals due, however, were accepted as part of net wealth for the relevant assessment year on the basis of prior authority. The reference was thus answered partly for the assessee and partly for the Revenue, while the remaining questions were left open for the Tribunal to decide on further material.

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Issues: (i) Whether the assessee's right to receive Rs. 25,00,000 from the State Government was an asset includible in net wealth under the Wealth-tax Act, 1957; (ii) Whether accrued interest and rentals due could be included in the assessee's net wealth for the relevant assessment year.

Issue (i): Whether the assessee's right to receive Rs. 25,00,000 from the State Government was an asset includible in net wealth under the Wealth-tax Act, 1957.

Analysis: The question was treated as covered by the Supreme Court decision in the Nizam's wealth-tax matter. The expression used in the charging scheme of the Wealth-tax Act is 'belonging to', and the Court proceeded on the basis that the asset in question fell within that understanding for wealth-tax purposes.

Conclusion: Answered in the negative, in favour of the assessee and against the Revenue.

Issue (ii): Whether accrued interest and rentals due could be included in the assessee's net wealth for the relevant assessment year.

Analysis: The question was treated as covered by earlier authority and no dispute was raised on that aspect. The Court accordingly accepted that the accrued interest and rentals formed part of the net wealth for the assessment year concerned.

Conclusion: Answered in the affirmative, in favour of the Revenue and against the assessee.

Final Conclusion: The reference was answered only on the two questions finally decided, one in favour of the assessee and the other in favour of the Revenue, while the remaining questions were left open for the Tribunal to decide on the basis of further material.

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