Compensation rights under wealth tax must be valued on the valuation date, with litigation risk and costs considered.

A right to receive compensation for acquired land is property and therefore an asset for wealth-tax purposes, but its value must be determined on the relevant valuation date by considering marketability, litigation risk, and incidental costs. The later civil court award cannot be adopted mechanically in full for valuation under the Wealth-tax Act. The right is not a mere right to sue; it is a subsisting and valuable property right that continues until finally quantified. The enhanced amount may be valued after making appropriate reductions for the hazards and expenditure involved in securing it.

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Issues: (i) Whether additional compensation awarded by a civil court in a land acquisition matter could be treated as an asset, in its entirety, for valuation under section 7(1) of the Wealth-tax Act, 1957. (ii) Whether the right to receive such additional compensation was a mere right to sue and therefore not includible as an asset on the relevant valuation dates.

Issue (i): Whether additional compensation awarded by a civil court in a land acquisition matter could be treated as an asset, in its entirety, for valuation under section 7(1) of the Wealth-tax Act, 1957.

Analysis: The right to receive compensation arising from acquisition is property and constitutes an asset for wealth-tax purposes. Its value has to be determined with reference to the relevant valuation date and not by mechanically adopting the later civil court award. In valuing such property, the assessing authority must consider its peculiar nature, marketability, and the risk or hazard of litigation. The amount ultimately received after litigation may therefore require reduction by the expenditure and hazards incurred in securing the enhanced amount.

Conclusion: The full amount of additional compensation could not be included as the asset's value in its entirety; the issue was answered in favour of the assessee.

Issue (ii): Whether the right to receive such additional compensation was a mere right to sue and therefore not includible as an asset on the relevant valuation dates.

Analysis: The right to receive compensation is not a bare right to sue. It is a subsisting and valuable property right that arises on acquisition and continues to exist until finally quantified. The later civil court determination does not create a fresh right, but only evaluates an existing one for the purpose of assessment on the relevant date.

Conclusion: The right was not a mere right to sue and was includible as an asset, so this issue was answered against the assessee and in favour of the Revenue.

Final Conclusion: Additional compensation arising from land acquisition is an asset for wealth-tax purposes, but its value must be assessed on the relevant date after accounting for litigation-related hazards and incidental costs, and not at the full amount of the later award.

Ratio Decidendi: A right to receive compensation for acquired land is an asset under the Wealth-tax Act, but its assessable value must be determined as on the valuation date by considering marketability, litigation risk, and related costs, and not by simply adopting the later enhanced award in full.

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