ivil Appeal Nos
3752 3755 of 1982
Appeal by Certificate from the Judgment and Order dated 221982 of the Allahabad High Court in Wealth Tax Reference No 179 of 1978
SC Manchanda Raja Ram Agarwal Dr Meera Agarwal and RC Mishra for the Appellant
889 Dr V Gauri Shankar Manoj Arora and Ms A Subhashini for the Respondent
The Judgment of the Court was delivered by SC AGRAWAL J
These appeals by certificate granted by the High Court under Section 291 of the Wealth Tax Act 1957 hereinafter referred to as the Act  are directed against the judgment of the High Court of Allahabad dated February 2 1982 in Wealth Tax Reference No 179 of 1978
The appellant FS Gandhi hereinafter referred to as the assessee  owns properties situate at Mahatma Gandhi Marg and Sardar Patel Marg in Civil Lines area at Allahabad
The lands on which these buildings stand were leased out to the assessee by the Government of Uttar Pradesh
The leases in respect of these properties except the property situate at 30 A Mahatma Gandhi Marg expired in 1958 and the lease in respect of the property situate at 30 A Mahatama Gandhi Marg expired in 1963
The Government of Uttar Pradesh issued notices to the assessee to hand over vacant possession of the leasehold lands
The properties are let out to the tenants and the assessee was receiving rental income from the same
For the assessment years 197 1 72 1972 73 1973 74 and 1974 75 the assessee submitted the Wealth Tax returns wherein he valued the properties at ten times of the annual rental income
The Wealth Tax Officer passed assessment orders wherein he valued the properties at fifteen times of the annual rental income
On appeal the Appellate Assistant Commissioner of Wealth Tax valued the said properties at twelve and a half times of the annual rental income
On further appeal the Income Tax Appellate Tribunal hereinaf ter referred to as the Tribunal  valued the properties at ten times of 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 fight 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 2ev of the Wealth Tax Act and its value was liable to be included in the net wealth of the assessee 890 2
Whether on correct interpretation of Section 2ev and relevant provisions of Transfer of Property Act the Tribunal was right in holding that the interest of the appellant in respect of properties in dispute was for a period over six years 3
Whether there was any material before the Tribunal to hold that on the relevant valuation date the property situated at 30 A Mahatama Gandhi Marg worth ten times of its annual was rental income while in previous years the value of the said property was shown and accepted at Rs 1 19000 4
Whether the Tribunal was right in holding that the property at 30 A Mahatama Gandhi Marg was to be valued on the basis of its annual income along with other properties notwithstanding the property in question was commercial property while other properties were residential houses and whether the multiple upheld by the Tribunal is justified in law and on facts 5
Whether on the facts and circumstances of the case the multiple of ten times of rental income in respect of property at 30 A Mahatama Gandhi Marg is not excessive and wholly unjustified By order dated February 2 1982 the High Court answered the said questions in the affirmative ie in favour of the Department and against the assessee
Thereafter the assessee moved an application under Section 291 of the Act for grant of certificate of fitness for appeal to this Court
By order dated July 8 1982 the High Court granted certificate of fitness on the view that the following ques tion is a question of law which is of general importance and as such this was a fit case in which an appeal could be filed before this Court Whether on the facts and circumstances of the case the Tribunal was fight in holding that the properties in respect to 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 2ev of the Wealth Tax Act and its valuation was liable to be included in the net wealth of the assessee 891 This question was amongst the questions referred to the High Court
While dealing with the said question the High Court has held on the determination of a lease by efflux of time or by notice it is the duty of the lessee to deliver vacant possession 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 a tenant at sufferance
His pos session 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 law into in his own hands and evict him
But in case the landlord expresses his assent by acceptance of rent or otherwise to his contin uing in possession this wrongful possession would be con verted into a lawful one
The landlord s assent may be expresse 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 Mahatama Gandhi Marg in 1963
The High Court has observed There is nothing on record to show that any attempt was made whatsoever by the State Government to enforce those notices given by it and the assessee had continued in peace ful possession and enjoyment of these properties all along
In our opinion therefore the assent of the landlord to the assessee s continuing in possession of these properties can be inferred and that being so that assessee would be treated to be a tenant of the same by holding over According to the High Court after determination of the earlier leases the assessee is lessee of properties under a new contract of tenancy and this tenancy is a tenancy from month to month under Section 116 read with Section 106 of the Transfer of Property Act
The High Court has further held that the present tenancy is a tenancy from month to month for an unstated period and it could not be said to be precarious in nature
The High Court was of the view that the said tenancy is an asset
as defined in Section 2e of the Act and is not 892 excluded under sub clause v because the said interest has been available to the assessee for a period exceeding six years from the date the new contract of tenancy came into existence
In the Act as originally enacted Section 2ev read as under In this Act unless the context otherwise re quires X X X X X X e assets includes property of every description movable or immovable but does not include X X X X X X v any interest in property where the interest is available to an assessee for a period not exceeding six years
 By the Wealth Tax Amendment Act 1964 which came into force with effect from April 1 1965 the words from the date the interest vests in the assessee were inserted at the end of sub clause v and thereafter sub clause v read as under 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
 By the Finance Act 1969 clause e of Section 2 of the Act was substituted by the following provision e assets includes property of every description movable or immovable but does not include 1 in relation to the assessment year commencing on the 1st day of April 1969 or any earlier assessment year i agricultural land and growing crop grass or standing trees on such land ii any building owned or occupied by a cultivator of or receiver of rent or revenue out of agricultural land Provided that the building is on or in the immediate 893 vicinity of the land 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 storehouse 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 avail able 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 year commencing on the 1st day of April 1970 and subsequent assessment years is sub clause 2 of clause e of Section 2
Since the assessments in question relate to assessment years 1971 72 to 1974 75 the matter has to be considered in the light of the provisions contained in clause e of Section 2 of the Act as substituted by Finance Act 1969
In framing questions Nos 1 and 2 for reference to the High Court the Tribunal has erroneously made a reference to sub clause v of clause e of Section 2 as it stood prior to the 1969 amendment
The High Court while answering these questions and granting the certificate of fitness for appeal to this Court did not notice this error
The provisions of Section 2ev as amended in 1964 are identical with the provisions of Section 2e2iii as substituted by the 1969 amend ment
The error is therefore of no consequence and the matter has been examined by us in the 894 ight of the provisions contained in clause e of Section 2 as substituted in 1969
Shri RR Agarwal the learned counsel for the appel lant has not disputed the findings recorded by the High Court that the assessee was n possession of the leasehold properties as a tenant holding over and hat the said tenancy was a tenancy from month to month for an restated period
The submission of Shri Agarwal is that the interest of he assessee under the said tenancy could not be regarded as an asset  ruder Section 2e of the Act and that it has to be excluded because he said interest cannot be regarded as an interest available to the assessee for a period exceeding six years from the date the interest vests in the assessee
The aforesaid contention of Shri Agarwal involves inter pretation of the words where the interest is available to an assessee for a period not exceeding six years from the date the interest vests in the assessee contained in Sec tion 2e2iii of the Act
The word available is pre ceded by the word is and is followed by the words for a period not exceeding six years
 The word is  although normally referring to he present often has a future mean ing
It may also have a past signification as in the sense of has been  See Black s Law Dictionary 5th Edn P 745 We are of the view that in view of the words for a period not exceeding six years which follow the word available the word is  must be construed as referring to the present and the future
In that sense it would mean that the inter est is presently available and is to be available in future for a 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 he assets of the assessee under Section 2e of the Act only after the expiry of the period of six years even though the interest is available to he assessee for a period exceeding six years from the date the interest tests 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 as to whether the interest should be included or excluded from the assets of the assessee under Section 2e2iii of the Act has to be considered in the light of he nature of interest on the relevant date
Under the said provision he 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 the assessee
895 This view of ours finds support from the decision of this Court in Commissioner of Wealth Tax Madras vs Smt
Muthukrishna Ammal  wherein the provisions of Section 2ev
as it stood prior to the amendment of 1964 have been considered
In that case the respondent assessee had obtained on lease from Government certain salt pans under two agreement dated January 1 1943 and January 1 1945 and each lease was to endure for 25 years but was liable to be determined by notice on either side at the close of any salt manufacturing season
In relation to wealth tax assessment years 1959 60 a question arose as to whether the assessee s interest in the salt pans for the unexpired period of the two leases was liable to be included in the computation of her net wealth
This Court held that the interest of the lessee under each lease was precarious inasmuch as it was liable to be determined by notie by the Government at the expiry of any manufacturing season and that the leasehold interest in the salt pans was not avail able to the assessee for a period exceeding six years from the valuation date
It was urged on behalf of the Revenue that since the assessee had enjoyed the rights under one lease for 16 years and in the other lease for 14 years and on the valuation date both the leases were outstanding the rights were assets within the meaning of the Act and that the expression is available to an assessee for a period not exceeding six years in clause v of Section 2e means is and has been available to an assessee for the period of six years before the date of valuation  It was also urged that if interest in property though revocable has remained unre voked for more than six years before the valuation date the interest would be an asset within the meaning of Section 2e
This Court rejected the said contention and held as under We are unable to agree with that contention
The expression used by Parliament is is available to an assessee for a period not exceeding six years and it must mean that the assessee though he has interest in property at the valuation date the interest will remain available for a period not exceeding six years
If it is to remain available for six years or for a shorter period the interest will fall within the exception if it is to remain available for a period exceeding six years it will fall 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 intro duced in sub clause v of Section 2e by the Wealth Tax Amendment Act 896 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 amend ment 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 2ev can be interpreted to mean that if an interests has been available to an assessee for a period exceeding six years from the date the interest vests in the assessee it would be asset
We are unable to agree with the said view
While construing the words is available to an assessee for a period not exceeding six years this Court in Commissioner of Wealth Tax vs Smt
Muthukrishna Ammal Supra has rejected the contention urged by the Revenue that the said words mean is and has been available to the assessee for a period of six years and this Court has construed the said words to mean that the interest will remain available for a period not exceed ing six years meaning thereby that the interest must be such that on the relevant date it is available presently and is available for a period not exceeding six years in future
The only change which was brought about in Section 2ev as a result of the amendment introduced in 1964 whereby the words from the date the interest vests in the assessee were inserted in that sub clause was that prior to the said amendment the relevant date was the valuation date and the availability of interest had to be seen with reference to that date and as a result of the amendment of 1964 the relevant date became the date on which the interest vests in the asseses and therefore the availability of the interest was to be seen with reference to the date on which the interest vests in the assessee
But the requirement that on the relevant date the interest would be available in future for a period exceeding six years as held by this Court in Commissioner of Wealth Tax vs Smt
Muthukrishna Ammal Supra remained unaltered
In this context it may also be mentioned that Commis sioner of Wealth Tax vs Smt
Muthukrishna Ammal Supra was decided by this Court on September 6 1968
The Finance Act 1969 whereby clause e of Section 2 of the Act was substi tuted was enacted by Parliament on May 13 1969
In the amended provisions of clause e Parliament has repeated the same language namely where the interest is avail 897 able to an assessee for a period not exceeding six years in item v of sub clause 1 and in item iii of sub clause 2
It must be assumed that while enacting the Finance Act 1969 Parliament was aware of the construction placed by this Court on these words in Commissioner of Wealth Tax vs Smt
Muthukrishna Ammal Supra
In repeating the said words in the amended clause e of Section 2 Parliament must be taken to have used the said words to bear the mean ing which has been put upon them by this Court in Commis sioner of Wealth Tax vs Smt
Muthukrishna Ammal Supra
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 con tract of tenancy and the said tenancy was a 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 2e2iii the said interest could not be treated as an asset of the asses see for the purpose of the Act
Our attention has been invited to the decision of the Allahabad High Court in Purshottam Dass Tandon and Others vs State of UP Lucknow and Others AIR 1987 All
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 granted leases of nazul lands in Civil Lines area of Allahabad and whose leases have expired and who were seeking renewal of those leases
After considering the various orders that were passed by the Government of Uttar Pradesh from time to time the High Court while disposing of the said petitions has given the following to the opposit parties i grant fresh leases to all those who had deposited the premium or at least one instalment on terms and conditions mentioned in 1959 Order read with 1960 Order ii issue notices to all those lessees to whom no notice was issued and determine their premium etc
on terms and conditions mentioned in 1959 60 Orders expeditiously 898 iii determine premium etc
of others to whom notices were issued but it could not be finalised for one reason or other at an early date iv determine rate of premium etc
for premises which are used as residential cum commercial purpose in light of 1965 Order v determine rate of premium used for commercial purpose in light of various Orders issued till 1965 and vi lessees shall after grant of fresh leases file the necessary forms etc
within one month before the Prescribed Authority under Urban Ceiling Act 1976 Act 33 of 76 if it had already not been filed who shall proceed to decide the same as expeditiously as possible
In view of the aforesaid directions that have been given by the High Court it can be said that the assessee whose leases expired in 1958 and 1963 can ask for grant of fresh leases on the terms and conditions mentioned in 1959 and 1960 Orders issued by the Government of Uttar Pradesh
In other words it can be said that in the relevant assessment years the assessee had the right to obtain fresh leases for the lands of the properties in question
But there is noth ing to show that in pursuance of the said right fresh leases have been granted by the Government of UP in respect of those lands and such leases were available to the assessee during the assessment years in question
For the reasons aforesaid it must be held that the properties in respect of which leases had expired in 1958 and 1963 and notices had been received by the assessee to hand over the possession were not assets within the meaning of section 2e2iii of the Act and the valuation of the same was not liable to be included in the net wealth of the assessee
Question No 1 referred by the Tribunal to the High Court must therefore be answered in the negative ie in favour of the assessee
Question No 2 referred by the Tribunal to the High Court is connected with Question No 1 and both the questions were considered by the High Court together
Since Question No 1 is answered in Favour of the assessee Question No 2 must also be answered in the nega tive ie in favour of the assessee and it must be held that the Tribunal was not right in holding that the interest of the assessee in respect of the properties in dispute was for a period over six years for the purpose of Section 2e2iii of the Act
899 In the result the appeals are allowed and the judgment and order of the High Court is set aside insofar as it relates to Questions Nos 1 and 2
The said questions are answered in favour of the assessee and against the Revenue
No order as to costs
NPV Appeals allowed


Summary:
On 961936 the predecessor in interest of the respond ents executed a lease deed in favour of the predecessor in interest of the appellant for a period of 15 years
The property leased out was vacant land well and Kaichalai and the lessee was permitted to construct on the vacant land and install petrol selling business
It was further stipulated that after the expiry of the lease period the lessee shall at his own expense remove the structure put up by him and deliver possession of the vacant land together with well and Kaichalai
The lease was extended from time to time
The lessor had filed petitions in 1962 and 1979 to evict the lessee under the Madras Buildings lease and Rent Control Act 1950 but without success
Thereafter in 1979 the present respondents instituted a petition for eviction of the lessee on the ground of demolition and reconstruc tion and of wilful denial of title within the meaning of Sections 141b and 102vii of the Tamil Nadu Buildings Lease and Rent Control Act
In the meantime the provisions of the Tamil Nadu City Tenants  Protection Act 1922 were extended to the municipal limits of Udamalpettai
Taking advantage of this the lessee filed petition claiming the benefit of compulsory purchase conferred on tenants of land under the said Act
The Dis trict Munsif cum Rent Controller allowed the lessor s peti tion for eviction and dismissed the lessee s petition for compulsory purchase
The Sub Judge dismissed the appeals
The lessee fried two revision petitions before the High Court which declined to interfere
Before this Court it was contended on behalf of the appellant that the original lease comprised only of the vacant site well and Kaichalai the kaichalai was merely in the nature of a shed put up for the tethering 783 of cattle and it was not a building  within the meaning of Section 22 of the Rent Control Act though the small Kaichalai was situated in a corner of the site the lease intended by the parties was only that of the site
It was further contended that where a lease was a composite one of land and buildings the court had to address itself to the primary or dominant intention of the parties if the inten tion was to lease a building the lease of land being ad junct or incidental the Rent Control Act would apply on the other hand if the dominant intention was to lease a site the presence of a building thereon not being consid ered material by either party the lease would not be one of a building  covered by the Rent Control Act
Larsen  Toubro case   relied upon
On behalf of the respondents it was contended that in the case of a composite lease the existence of a building or hut on the land howsoever small insignificant or use less it may be was sufficient per se to bring the lease within the scope of the Rent Control Act
Irani vs Chidambaram Chettiar AIR 1953 Madras 650 and Salay Mohd Sait vs
JMS Charity 1969 1 MLJ SC 16 relied upon
Dismissing the appeals this Court HELD 1 The Tamil word kaichalai seems to denote a structure or a roof put up by hand
Whatever may be the precise meaning of the term the definition in Section 22 of the Rent Act clearly includes the kaichalai  in the present case
789D 2 Since the Rent Act applies to residential and non residential buildings alike the expression hut  cannot be restricted only to huts or cottages intended to be lived in
It will also take in any shed hut or other crude or third class construction consisting of an enclosure made of mud or by poles supporting a tin or asbestos roof that can be put to use for any purpose residential or non residential in the same manner as any other first class construction
789E F 3 In the case of composite lease of land and building a question may well arise whether the lease is one of land although there is a small building or hut which does not really figure in the transaction or of a lease of the building in which the lease of land is incidental or a lease of both regardless of their respective dimensions
790G 784 4 It is not always necessary that there should be a dominant intention swaying the parties
There may be cases where all that is intended is a joint lease of both the land and the building without there being any consideration sufficient to justify spelling out an intention to give primacy to the land or the building
The test of dominant intention or purpose may not be very helpful in such cases in the context of this legislation
791F 792B Sivarajan vs Official Receiver AIR 1953 Trav
Co 105 Nagamony vs Tiruchittambalam AIR 1953 Trav
Co 369 Offi cial Trustee vs United Commercial Syndicate  Raj Narain vs Shiv Raj Saran AIR  Ven kayya vs Subba Rao AIR 1957 AP 619 Uttam Chand vs Lalwani AIR 1965 SC 716 and Dwarka Prasad vs Dwarkadas  5 In the context of this case we should be guided not by any theory of dominant purpose but by the consideration as to whether the parties intended that the building and land should go together or whether the lessor could have intended to let out the land without the building
794B Sultan Bros P Ltd vs CIT   referred to
6 Having regard to all the facts and circumstances the correct inference appears to be that what the lessor intended was a lease of both the land and the building this being a composite lease with a composite purpose
In these circumstances this letting would come in within the scope of Rent Control Act
795C 7 Where a person leases a building together with land it seems impermissible in the absence of clear intention spelt out in the deed to dissect the lease as a of build ing and appurtenant land covered by the Rent Control Act and b of land alone governed by other relevant statutory provisions
What the parties have joined the court cannot tear as under
796B