Accrual of compensation for acquired land determines net wealth inclusion when statutory vesting occurs after the valuation date.

Compensation for acquired agricultural land was not includible in net wealth on the valuation date where possession had been given before the award but statutory vesting in the Government occurred only on the award date. Until vesting, the assessee retained ownership and had no enforceable right to compensation on the relevant date, so the later receipt could not be taxed as wealth for that year. The residential building and specified agricultural land were also treated as exempt under the Wealth-tax Act, leaving no taxable wealth for the year.

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Issues: Whether compensation for acquired agricultural land could be included in the assessee's net wealth on the valuation date when possession had been given before the award but title vested in the Government only on the award date.

Analysis: Under the Kerala Land Acquisition Act, 1961, the Government acquires absolute title only when the Collector takes possession after the award under section 18, or in urgency cases under section 19. On the facts, possession was voluntarily given before the award, but the statutory vesting occurred only when the award was passed. Until that date, the assessee continued to own the land and had no enforceable right to receive compensation on the valuation date. Since the right to compensation arose only after the valuation date, the amount received later could not form part of the net wealth for the year in question. The residential building and the specified agricultural land were also covered by the statutory exemptions under the Wealth-tax Act, 1957.

Conclusion: The inclusion of the compensation amount in the assessee's net wealth was not justified, and the exemption provisions left no taxable wealth for the year.

Final Conclusion: The assessment was set aside and the appeal succeeded.

Ratio Decidendi: In land acquisition matters, compensation becomes includible in net wealth only when the right to receive it has accrued on the valuation date; where statutory vesting of the land in the Government occurs after that date, the compensation cannot be assessed as part of the assessee's wealth for that year.

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