TaxTMI 
TaxTMI 
TaxTMI 
1986 (10) TMI 2
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.... mentioned that the valuation date is the first valuation date after coming into operation of the Act which came into force on April 1, 1957. The assessee was the Nizam of Hyderabad, an individual. There were several questions involved in the assessment with all of which the present appeal is not concerned. So far as concerns the first question indicated hereinbefore which was really question No. (ii) in the statement of the case before the High Court, it may be mentioned that the Wealth-tax Officer had included a total sum of Rs. 4,90,775 representing the market value of certain immovable properties in respect of which, although the assessee had received full consideration money, he had not executed any registered sale deeds in favour of the vendees. The Wealth-tax Officer held that the assessee still owned those properties and, consequently, the value of the same was included in his net wealth. On appeal, the Appellate Assistant Commissioner sustained the order with certain deductions in value. On further appeal, the Tribunal held that the assessee had ceased to be the owner of the properties. The Tribunal was of the opinion that the assessee, having received the consideration ....
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....The other parts of the agreement contained in that letter are not relevant for the present purpose. The Wealth-tax Officer treating the said sum as an annuity and, secondly, as an asset or property, capitalised the same at Rs. 99,78,572 and included that amount as an asset of the assessee. The Appellate Assistant Commissioner agreed with the view taken by the Wealth-tax Officer. The Tribunal, however, refused to call it an annuity and characterised it as an annual payment for surrender of life interest. The Tribunal, therefore, held that the capitalised value of such life interest be added to the net wealth and taxed. The High Court in the judgment under appeal agreed with the view taken by the Tribunal that it was only an annual payment made in compensation for the property which had been taken over by the Government. It was, therefore, a part of the wealth, according to the High Court. The High Court was of the view that it was possible to commute the annual payment of Rs. 25 lakhs. The High Court found that there was neither any express preclusion nor any circumstances from which legitimately an inference could be drawn precluding commutation of the said amount into a lump sum....
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....purpose of this case to be tied down with the controversy whether in India there is any concept of legal ownership apart from equitable ownership or not or whether under sections 9 and 10 of the Indian Income-tax Act, 1922, and sections 22 to 24 of the Income-tax Act, 1961, where II owner " is spoken of in respect of house properties, the legal owner is meant and not the equitable or beneficial owner. Salmond on Jurisprudence, twelfth edition, discusses the different ingredients of " ownership on pages 246 to 264. " Ownership ", according to Salmond, denotes the relation between a person and an object forming the subject-matter of his ownership. It consists of a complex of rights, all of which are rights in rem, being good against all the world and not merely against specific persons. Firstly, Salmond says, the owner will have a right to possess the thing which he owns. He may not necessarily have possession. Secondly, the owner normally has the right to use and enjoy the thing owned: the right to manage it, i.e., the right to decide how it shall be used; and the right to the income from it. Thirdly, the owner has the right to consume, destroy or alienate the thing. Fourthly, owner....
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....dominion and lawful dominion and he should be the person assessable to wealth-tax for this purpose. In CWT v. Trustees of H. E. H. Nizam's Family (Remainder Wealth) Trust [1977] 108 ITR 555 (SC), the question as to what is the meaning of the expression " belonging to " was raised (page 594 of the report) but this court did not decide whether the trust property belonged to the trustee and whether the trustee was liable under section 3 of the Act apart from or without reference to section 21 of the Act. The case was disposed of in terms of section 21 of the Act. In CIT v. Nawab Mir Barkat Ali Khan [1974] Tax LR 90, it was held by the Andhra Pradesh High Court that when a vendor had agreed to sell his property as in the instant case and had received consideration thereof but had not executed a registered sale deed, his liability to pay tax on income from that property did not cease. His position as " owner " of the property within the meaning of section 9 of the Indian Income-tax Act, 1922, and section 22 of the Income-tax Act, 1961, did not thereby change. According to the said decision, the agreement to sell and the receipt of consideration by the assessee, the Nizam of Hyderabad,....
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.... owner, both in respect of vendor and purchaser, and trustee cestui que trust. The income from house property refers to the legal owner and further in case of a sale of immovable property, a registered document was necessary. But these propositions as noted hereinbefore rested on the use of the expression in section 9 of the Indian Income-tax Act, 1922. It used the expression " owner " unlike " belonging to ". The Gujarat High Court, in CWT v. Manna G. Sarabhai [1972] 86 ITR 153, held that a spes successionis is a bare and naked possibility such as the chance of a relation obtaining a legacy and that could not form the basis of assessment under section 26 of the Act. At page 174 of the report, the Gujarat High Court referred to the expression " belonging to " and referred to the fact that the expression has been the subject-matter in a number of judicial decisions. The court observed that the words " property " and "belonging to " were not technical words. The Gujarat High Court had an occasion to deal with part performance in the case of an agreement of sale in CIT v. Ashaland Corporation [1982] 133 ITR 55. The Gujarat High Court noted that in the case of a person who was a deal....
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....arat High Court that receipt of part of the sale price and parting of possession would not divest the vendor of immovable property of his title to the property. The doctrine of part performance embodied in section 53A of the Transfer of Property Act had limited application and afforded only a good defence to the person put in possession. The legal position and the relevant clauses of the agreement of sale showed that the assessee was the owner of the property at the relevant valuation dates. Therefore, according to the Gujarat High Court, the property agreed to be sold and which had been parted with was includible as an asset of the assessee. Even in some cases the phrase " belonging to " is capable of connoting interest which is less than absolute perfect legal title. See, in this connection., the observations of this court in Raja Mohammad Amir Ahmed Khan v. Municipal Board of Sitapur, AIR 1965 SC 1923. This court observed in that case that though the expression " belonging to " no doubt was capable of denoting an absolute title, it was nevertheless not confined to connoting that sense. Full possession of an interest less than that of full ownership could also be signified by th....
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....etion of the building, he was in a position to earn income from the property sold to him, though the registered sale deed was executed subsequently in April, 1969. It was held that the assessee was " owner " in terms of section 22 of the Income-tax Act, 1961. The Madras High Court had occasion to discuss this aspect in M. P. Gnanambal v. CIT [1982] 136 ITR 103 (Mad). There the facts were entirely different and the Madras High Court held that the rights with reference to the properties in question in that case could only be described as a delusion and a snare so long as the sons continued to occupy the property which they were entitled to under the will and to describe the assessee's right as owner of the property would be a complete misnomer. There, the court was construing a will and section 22 of the Income-tax Act, 1961, as to who were the owners in terms of the will. In all these cases, as was reiterated by the Calcutta High Court in S. B. (House & Land) Pvt. Ltd. v. CIT [1979] 119 ITR 785, the question of ownership had to be considered only in the light of the particular facts of a case. The Patna High Court in Addl. CIT v. Sahay Properties and Investment Co. P. Ltd. [1983] ....
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.... to ". The property in question legally, however, cannot be said to belong to the vendee. The vendee is in rightful possession only against the vendor. Speaking for myself, I have deliberated long on the question whether in interpreting the expression "belonging to" in the Act, we should not import the maxim that " equity looks upon a thing as done which ought to have been done " and though the conveyance had not been executed in favour of the vendee, and the legal title vested with the vendor, the property should be treated as belonging to the vendee and not to the assessee. I had occasion to discuss thoroughly this aspect of the matter with my learned brother and since in view of the position that legal title still vests with the assessee and the authorities, we have noted, are preponderantly in favour of the view that the property should be treated as belonging to the assessee in such circumstances, I shall not permit my doubts to prevail upon me to take the view that the property belongs to the vendee and not to the assessee. I am conscious that it will work some amount of injustice in such a situation because the assessees would be made liable to bear the tax burden in such si....
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....htful possession of the same as against the assessee and in occupation of the property in question and, secondly, the entire consideration has been paid and, thirdly, the purchasers were entitled to resist eviction from the property by the assessee in whose favour the legal title vested because conveyance has not yet been executed by him and when the purchasers in possession had a right to call upon the assessee to execute the conveyance, it cannot (sic) be said that the property legally belonged to the assessee in terms of section 2(m) of the Act on the facts and circumstances of the case, even though the statute must be read justly and equitably and with the object of the section in view. We are conscious that if a person has the user and is in the enjoyment of the property, it is he who should be made liable for the property in question under the Act ; yet the legal title is important and the Legislature might consider the suitability of an amendment if it is so inclined. This question, therefore, must be answered in favour of the Revenue and in the affirmative. The appeal, on this aspect, must, therefore, fail. For the second question, it is necessary to refer to section 2(e)....
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....due of the income from the trusts in equal shares to the beneficiaries after deducting all costs and expenses. The assessee had a right after she had attained majority and after the birth of her first child to require the trustees to pay her shares out of the corpus of the trust fund absolutely up to one-half thereof. Under another trust created by her mother-in-law of certain sums of money and certain shares, the trustees were required to pay the income of the trust funds after deducting expenses to the assessee during her lifetime. It was held that the payments to the assessee under the trust deeds were not " annuities " within the meaning of section 2(e)(iv) of the Act. In CWT v. Her Highness Maharani Gayatri Devi of Jaipur [1971] 82 ITR 699 (SC), this question arose again. Tile Maharaja of Jaipur had executed a deed of irrevocable trust whereunder the properties mentioned in the Schedule thereto stood transferred to the trustee. The trust fund was to include the assets mentioned in the Schedule and also such additions thereto and other capital moneys which might be received by the trustee. The assessee was one of the beneficiaries under the trust to whom the trustee was to pay....
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....rse which was not commutable; the other was payment of Rs. 25 lakhs for the upkeep of palaces, etc., and the third of Rs. 25 lakhs in lieu of his previous income from the Sarf-e-khas. Income is normally meant for expenditure. The Nizam had to incur various expenditure. Commutation is often made when one is not certain as to whether the source from which that income comes will endure ; for example, when a man retires from service, he normally commutes in order to ensure for himself and after his death for his family a certain income which he can ensure by getting the commuted amount invested in his private bank or otherwise which he may not be sure because upon his death the pension will cease. In this case, this being an agreement between an erstwhile ruler and the Government of India, there is no such motivation and this payment of Rs. 25 lakhs in lieu of the previous income of Sarf-e-khas must be read in conjunction with two other sums, namely, Rs. 50 lakhs as privy purse and Rs. 25 lakhs for upkeep of palaces. This bears the same character. As privy purses were not commutable, we are of the opinion that from the circumstances and keeping in view the background of the payment, ....