TaxTMI 
TaxTMI 
1990 (5) TMI 1
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....t of Uttar Pradesh issued notices to the assessee to hand over vacant possession of the leasehold lands. The properties are let out to tenants and the assessee was receiving rental income from the same. For the assessment years 1971-72, 1972-73, 1973-74 and 1974-75, the assessee submitted wealth-tax returns wherein he valued the properties at ten times the annual rental income. The Wealth-tax Officer passed assessment orders wherein he valued the properties at fifteen times the annual rental income. On appeal, the Appellate Assistant Commissioner of Wealth tax, valued the said properties at twelve and a half times the annual rental income. On further appeal, the Income-tax Appellate Tribunal (hereinafter referred to as "the Tribunal") valued the properties at ten times the annual rental income. At the request of the assessee, the Tribunal referred the following questions of law to the High Court: "1. Whether, on the facts and circumstances of the case, the Tribunal was right in holding that properties in respect of which leases had expired in 1958 and 1963, and notices had been received to hand over the possession were assets within the meaning of section 2(e)(v) of the Wealt....
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....ion of the demised premises to the lessor. If he continues in possession even after the determination of the lease, his possession is secured inasmuch as the lessor cannot evict him otherwise than in due course of law and if he continues in possession without the assent or dissent of the landlord, he would be tenant at sufferance. His possession would be wrongful but not unlawful. It is wrongful because the erstwhile tenant continues in possession beyond the expiry of the period fixed in the lease. It is not unlawful because the landlord cannot take the law into his own hands and evict him. But in case the landlord expresses his assent by acceptance of rent or otherwise to his continuing in possession, his wrongful possession would be converted into a lawful one. The landlord's assent may be expressed or implied. " Taking into consideration the facts of the present case, the High Court has found that the leases of the properties expired in 1958 and that of 30-A, Mahatma Gandhi Marg in 1963. The High Court has observed (at page 115) : "There is nothing on record to show that any attempt was made whatsoever by the State Government to enforce that notice. The assessee had contin....
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....and and is a building which the cultivator or the receiver of rent or revenue by reason of his connection with the land requires as a dwelling house or a store-house or an outhouse; (iii) animals; (iv) a right to any annuity in any case where the terms and conditions relating thereto preclude the commutation of any portion thereof into a lump sum grant; (v) any interest in property where the interest is available to an assessee for a period not exceeding six years from the date the interest vests in the assessee (2) in relation to the assessment year commencing on the 1st day of April, 1970, or any subsequent assessment year (i) animals ; (ii) a right to any annuity in any case where the terms and conditions relating thereto preclude the commutation of any portion thereof into a lump sum grant; (iii) any interest in property where the interest is available to an assessee for a period not exceeding six years from the date the interest vests in the assessee." As a result of the aforesaid amendment, the provision which is applicable in relation to the assessment years commencing on the 1st day of April, 1970, and subsequent assessment years is sub-clause (2) of....
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....est is presently available and is to be available in future for period not exceeding six years. The High Court has construed the word "is" to mean "has been". As per the construction placed by the High Court, in a case where an interest has been created for a period exceeding six years, it would be included in the assets of the assessee under section 2(e) of the Act only after the expiry of the period of six years even though the interest is available to the assessee for a period exceeding six years from the date the interest vests in the assessee. The construction placed by the High Court instead of placing emphasis on the nature of the interest attaches importance to the enjoyment of the interest. We are unable to subscribe to that view. In our opinion, the question whether the interest should be included or excluded from the assets of the assessee under section 2(e)(2)(iii) of the Act has to be considered in the light of the nature of interest on the relevant date. Under the said provision the relevant date is the date on which the interest vests in the assessee. Therefore, the matter has to be considered by examining the nature of the interest on the date the interest vests in ....
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.... within the definition of "assets" and its value will be liable to be included in the net wealth of the assessee." In that case, this court has noticed the amendment introduced in sub clause (v) of section 2(e) by the Wealth-tax (Amendment) Act, 1964, but did not consider it necessary to deal with it because the said matter related to the period prior to the said amendment. The High Court has sought to distinguish this decision on the view that the position has changed after the amendment introduced in 1964 and that the insertion of the words "from the date the interest vests in the assessee" means that if an interest has been available to the assessee for a period exceeding six years from the date the interest vests in the assessee, it would be an asset while, prior to its amendment, if the interest was not available to an assessee for a period not exceeding six years, it could not be treated as an asset. The High Court has observed that as a result of the amendment of 1964, section 2(e)(v) can be interpreted to mean that if an interest has been available to an assessee for a period exceeding six years from the date the interest vests in the assessee, it would be an asset. W....
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....Muthukrishna Ammal [1969] 72 ITR 801. In the instant case, it has been found that, after the expiry of the leases of the assessee in the years 1958 and 1963, the assessee continued in possession under a new contract of tenancy and the said tenancy was tenancy from month to month for an unstated period. The said tenancy was precarious in nature because it could be terminated by the lessor, viz., the Government of Uttar Pradesh, at any time by a notice under section 106 of the Transfer of Property Act. The fact that such a notice was not given cannot mean that the interest created by the said new tenancy was an interest available to the assessee for a period exceeding six years from the date the interest vested in the assessee. In the circumstances, in view of section 2(e)(2)(iii), the said interest could not be treated as an asset of the assessee for the purpose of the Act. Our attention has been invited to the decision of the Allahabad High Court in Purshottam Dass Tandon v. State of U. P., AIR 1987 All 56. From the said decision, it appears that a number of petitions were filed in the Allahabad High Court under article 226 of the Constitution of India by lessees who had been....