Compensation right under land ceiling law is not Government bonds; wealth-tax valuation must reflect discounted present worth.

Enhanced valuation of the disputed properties was upheld because the earlier returned values were not shown to remain reliable after lapse of time, and the rental arrangement did not bind acceptance of the old capital value. A right to receive compensation for lands vested in the Government under the land ceiling law could not be treated as Government bonds for exemption on the valuation date, since payment could be made in cash or bonds at the Government's discretion. That right was assessable as an actionable claim and had to be valued at its present worth on a discounted basis, not at face value.

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Issues: (i) Whether the enhancement of the valuation of the disputed properties was justified. (ii) Whether the right to receive compensation for lands taken over under the land ceiling law could be treated as Government bonds for exemption, and if not, how such right was to be valued for wealth-tax purposes.

Issue (i): Whether the enhancement of the valuation of the disputed properties was justified.

Analysis: The properties in question had not been shown to have retained the earlier returned values in the face of the lapse of years and the surrounding circumstances. In respect of the rented property, the record did not establish a basis for treating the old valuation as constant, and the tenancy arrangement was not produced. The rent paid by the husband in the other property was not accepted as a rigid index of capital value, since the value of immovable property was liable to increase and the rental arrangement did not compel acceptance of the old valuation.

Conclusion: The enhancement in valuation of the disputed properties was upheld, and this issue was decided against the assessee.

Issue (ii): Whether the right to receive compensation for lands taken over under the land ceiling law could be treated as Government bonds for exemption, and if not, how such right was to be valued for wealth-tax purposes.

Analysis: On the valuation date, the lands had already vested in the Government and what remained was only a right to receive compensation. Under section 55 of the Madras Land Reforms (Fixation of Ceiling on land) Act, 1961, compensation could be paid in cash or in bonds at the Government's discretion, so the right itself could not be equated with Government bonds as on the valuation date. The exemption claim therefore failed because the bonds were issued later and could not be related back to an earlier date to create an exempt asset. At the same time, the right to receive compensation was not to be taken at face value without discounting, because the time and mode of payment were uncertain and the asset had to be valued at its present worth. The right was treated as an actionable claim and movable property, and its value was estimated at a discounted figure.

Conclusion: The claim for exemption as Government bonds was rejected, but the compensation right was valued at a reduced amount, resulting in partial relief to the assessee.

Final Conclusion: The appeal succeeded only in part, with the compensation right brought to wealth-tax on a discounted valuation while the other valuation additions were sustained.

Ratio Decidendi: A right to receive compensation, where payment may be made in cash or bonds at the Government's discretion, cannot be treated as Government bonds for exemption on an earlier valuation date, and such right must be valued as an actionable claim at its present market worth.

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