Wealth-tax valuation of partnership compensation rights allowed a limited reduction where payment was deferred and liabilities remained.

The value of an assessee's interest in a nationalised partnership business for wealth-tax purposes was held to include the right to receive the balance compensation payable on takeover, not merely the income component earlier assessed in the firm's hands. The interest could not be treated as nil because the assets had been taken over and payment was deferred, but the delayed availability and related liabilities justified a factual allowance. On that basis, the assessed value of the disputed balance was restricted, with 90 per cent directed to be taken as the value of the assessee's interest, giving partial relief.

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Issues: Whether the assessee's interest in the nationalised partnership business, represented by compensation and related receivables, was to be valued in full for wealth-tax purposes or whether a further reduction was warranted because the amount had not been immediately paid and was subject to liabilities.

Analysis: The valuation for wealth-tax could not be confined to the income component earlier assessed in the firm's hands, because the assessee's wealth comprised the right to receive the balance compensation payable on nationalisation. The right was not nil merely because the assets were taken over and the exact cash payment was postponed. The compensation amount had already been determined, subject mainly to liabilities, and the subsequent years' interest component had already been excluded by the assessing authority. At the same time, the compensation was not immediately available to the assessee, so some allowance was justified on the facts.

Conclusion: The assessee was entitled to a limited reduction, and 90 per cent of the disputed balance amount was directed to be taken as the value of his interest in the firm's assets, resulting in partial relief in favour of the assessee.

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