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Issues: Whether the right to receive compensation under Section 72A of the Kerala Land Reforms Act, 1963 was an asset under the Wealth-tax Act, 1957 on the valuation date, and whether that right could be taken as having nil market value.
Analysis: The right to compensation arose after vesting of the landowner's interest in the Government under the Kerala Land Reforms Act, 1963 and represented an ascertainable sum payable in accordance with the statutory scheme. Under Section 7(1) of the Wealth-tax Act, 1957, the value of an asset is to be estimated as the price it would fetch if sold in the open market on the valuation date. That test assumes a hypothetical open market and does not require proof of an actual market. The uncertainties arising from litigation over the validity of the land reforms legislation and the fact that payment depended on statutory determination and Government disbursement may affect valuation, but they do not eliminate value altogether.
Conclusion: The right to receive compensation was an asset and could not be treated as having nil market value. The valuation could not be rejected on the footing that the asset had no value, and the answer on that issue was against the assessee and in favour of the Revenue.
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