Compensation rights are wealth-tax assets, and long-outstanding agricultural income-tax is not a deductible debt.

A vested right to receive compensation under the Bihar Land Reforms Act was treated as property within the wide definition of "assets" under the Wealth-tax Act, so its estimated value was includible in net wealth despite uncertainty over the exact amount or mode of payment. Agricultural income-tax outstanding for more than twelve months on the valuation date fell within the statutory exclusion for tax liabilities under section 2(m)(iii) and was not deductible as a debt owed. Both questions were answered against the assessee and in favour of the revenue.

---

---

Issues: (i) Whether the right to receive compensation under the Bihar Land Reforms Act constituted an asset within section 2(e) of the Wealth-tax Act and was includible in net wealth. (ii) Whether agricultural income-tax outstanding for more than twelve months was deductible as a debt owed under section 2(m) of the Wealth-tax Act.

Issue (i): Whether the right to receive compensation under the Bihar Land Reforms Act constituted an asset within section 2(e) of the Wealth-tax Act and was includible in net wealth.

Analysis: The definition of "assets" in the Wealth-tax Act is wide and includes property of every description, subject only to specific exclusions. A right to receive compensation arising on vesting of the estate is a right relating to property and is not excluded by the statutory exceptions. The amount payable may require ascertainment and its market value must be estimated under section 7(1) of the Act, but uncertainty as to quantum or mode of payment does not prevent the right itself from being an asset.

Conclusion: The right to receive compensation was an asset and was liable to be included in the assessee's net wealth; the issue was decided against the assessee.

Issue (ii): Whether agricultural income-tax outstanding for more than twelve months was deductible as a debt owed under section 2(m) of the Wealth-tax Act.

Analysis: Section 2(m)(iii) excludes from deductible debts any tax, penalty or interest payable in consequence of any law relating to taxation of income or profits if outstanding for more than twelve months on the valuation date. A State agricultural income-tax is a law relating to taxation of income or profits, and the outstanding liability therefore falls within the exclusion. Such an amount cannot be treated as a deductible debt in computing net wealth.

Conclusion: The outstanding agricultural income-tax was not deductible as a debt owed by the assessee; the issue was decided against the assessee.

Final Conclusion: Both referred questions were answered in favour of the revenue, and the assessee's net wealth was to be computed accordingly.

Ratio Decidendi: A vested right to receive statutory compensation is property falling within the wide definition of assets under the Wealth-tax Act, and tax liabilities falling within the statutory exclusion for taxes outstanding beyond twelve months are not deductible in computing net wealth.

---