Wealth-tax valuation of acquired land turns on the present worth of the right to receive compensation, not the final enhanced award.

For wealth-tax purposes, once acquisition proceedings had commenced and compensation had been awarded but not finally settled, the taxable asset was the assessee's enforceable right to receive compensation, not the land itself or the eventual enhanced amount. That right had to be valued on each valuation date at its present worth, reflecting the existing award and the uncertainties of further litigation. The CBDT circular dated 15 May 1964 was held inapplicable on the facts. The Tribunal was directed to reconsider valuation afresh in light of the principle that the asset under assessment is the right to compensation and not the final compensation figure.

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Issues: (i) Whether, for wealth-tax purposes, the asset to be valued on the relevant valuation dates after acquisition proceedings had commenced was the land itself or the assessee's right to receive compensation; (ii) whether the Central Board of Direct Taxes circular dated 15 May 1964 applied to the valuation of the acquired estate.

Issue (i): Whether, for wealth-tax purposes, the asset to be valued on the relevant valuation dates after acquisition proceedings had commenced was the land itself or the assessee's right to receive compensation.

Analysis: For the year before acquisition notifications, the value of the land itself was relevant. For the subsequent years, once acquisition proceedings were initiated and compensation had been awarded but not finally settled, the property to be assessed was not the enhanced compensation as such, but the assessee's right to receive compensation. That right was an asset and had to be valued as on each valuation date on the basis of its present worth, taking into account that the final compensation was still subject to litigation and could not be fixed at the claimant's full claim or the eventual judicial award. The valuation therefore had to reflect the existing award and the uncertainties attending further enhancement.

Conclusion: The relevant asset was the right to receive compensation, and it had to be valued at its present value on the valuation date; the matter required fresh consideration by the Tribunal.

Issue (ii): Whether the Central Board of Direct Taxes circular dated 15 May 1964 applied to the valuation of the acquired estate.

Analysis: The parties accepted that the circular had no application to the facts of the case, and the valuation adopted by the Tribunal could not be sustained on that basis.

Conclusion: The circular was inapplicable.

Final Conclusion: The references were not answered on merits, and the Tribunal was directed to restore the appeals and decide the valuation afresh in the light of the court's observations on the taxable asset and its present valuation.

Ratio Decidendi: For wealth-tax valuation of property under acquisition, the taxable asset is the owner's enforceable right to receive compensation, and its value on the valuation date is the present worth of that right, not the eventual enhanced compensation as such.

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