JUDGMENT R.S. Pathak, J.
1. The Appellate Tribunal has made this reference under Section 27(1) of the Wealth-tax Act, 1957, on the following question :
"Whether, on the facts and in the circumstances of the case, the assessment For the assessment year 1957-58 of the market value of the bonds of the face value of Rs. 26,27,300 is right in law having regard to the provisions of Section 2(e) of the Wealth-tax Act, 1957, and the provisions of the U. P. Zamindari Abolition and Land Reforms Act, 1951 ?"
2. The assessee, Maharaja Pateshwari Prasad Singh of Balrampur, owned extensive estates in the State of Uttar Pradesh. On the abolition of zamindari under the U. P. Zamindari Abolition and Land Reforms Act his proprietary rights as an intermediary in the estates ceased and vested in the State of Uttar Pradesh and he became entitled under the Act to compensation. The compensation was paid, in accordance with the provisions of the Act and the rules made thereunder, in the form of promissory notes described as Zamindari Abolition Compensation Bonds. The assessee received compensation bonds of the face value of Rs. 190,550 during the period immediately prior to March 31, 1957. Subsequently, on various dates between January 11, 1958, and March 12, 1958, he received further compensation bonds of the face value of Rs. 26,27,300.
3. In assessment proceedings under the Wealth-tax Act for the assessment year 1957-58, the relevant valuation date being March 31, 1957, the Wealth-tax Officer included the market value of the compensation bonds received by the assessee prior to that date. He also included the market value of the remaining compensation bonds of the face value of Rs. 26,27|300, which were received after the valuation date. The assessee appealed". The Appellate Assistant Commissioner of Wealth-tax held that while the Wealth-tax Officer was justified including the market value of compensation bonds already received by the assessee before the valuation date, there was no justification for including the market value of compensation bonds received after the valuation date and accordingly he excluded from the computation of the assessee's total assets an amount representing such market value. The Wealth-tax Officer appealed to the Appellate Tribunal, and the Appellate Tribunal held that, although the compensation bonds were received after the valuation date, what arose for valuation was the right accruing to the assessee to compensation under the U.P. Zamindari Abolition and Land Reforms Act, on the, abolition of his estate on July 1, 1952, and that right to compensation fell to be valued as on the valuation date and was represented by the market value of the compensation bonds. The Appellate Tribunal reserved the finding of the Appellate Assistant Commissioner and restored the amount included by the Wealth-tax Officer. At the instance of the assessee, the Appellate Tribunal has now made the present reference. .
4. The question which the Appellate Tribunal has referred is in substance whether the market value of the compensation bonds of the face value of Rs. 26,27,300 could be included in the total assets of the assessee for the purpose of wealth-tax for the assessment year 1957-58.
5. Under Section 4 of the U.P. Zamindari Abolition and Land Reforms Act all estates situated in Uttar Pradesh vested in the State as from the date of vesting. The date of vesting was July 1, 1952. The consequence of such vesting are detailed in Section 6 of the Act and generally amount to the abolition of all rights, title and interest of the intermediaries in the estate and their vesting in the State of Uttar Pradesh. In lieu of the right, title and interest enjoyed so far by the intermediaries in the estates the Act provided for payment of compensation. By virtue of Section 27 of the Act every intermediary, whose rights, title and interest in any estate were acquired under the provisions of the Act become entitled to receive and be paid compensation. Chapter IV of the U.P. Zamindari Abolition and Land Reforms Rules provides for the payment of compensation. Rule 62 / declares that the compensation shall be paid in negotiable bonds in the form of promissory notes which shall be described as Zamindari Abolition Compensation Bonds. Then follow rules detailing the manner in which the bonds shall be prepared and payment made under them.
6. There can be no dispute that in respect of compensation bonds already received by the assessee he was entitled to the right to receive payment under and in accordance with the rules and the terms of the compensation bonds, and as the bonds were quoted in the market the Wealth-tax Officer was justified in taking the rate quoted as the market rate for the purpose of valuing the compensation bonds already received by the assessee. In respect of compensation bonds not yet received by the assessee, the assessee was entitled to receive those compensation bonds by virtue of Section 27 of the Act and it is that right which fell to be valued on the valuation date. In our opinion, the market value of the compensation bonds of the face value of Rs. 26,27,300 in so far as it represented the value of the assessee's right to those bonds was includible for the purpose of wealth-tax for the assessment year 1957-58.
7. The question has been considered by a number of courts in this country wherever estates of intermediaries or jagirdars have been abolished and compensation has become payable under the statute therefor : see Maharajkumar Kamal Singh v. Commissioner of Wealth-tax, Sardar C.S. Angre v. Commissisner of Wealth-tax, Pandit Lakshmi Kant Jha v. Commissioner of Wealth-tax and Vadrevu Venkappa Rao v. Commissioner of Wealth-tax. The view taken by the courts in these cases supports the opinion to which we have come in the present case.
8. We, accordingly, hold that the market value as on March 31, 1957, of the bonds of the face value of Rs. 26,27,300 was includible in the computation of the net wealth of the assessee for the assessment year 1957-58. We answer the question referred accordingly.