Case: Commissioner of Wealth Tax, Andhra Pradesh Vs. Raja Velugoti Sarvagna Kumar Krishna Yachendra Bahadur (dead) by L. Rs. etc

2. In this case we are concerned with the net wealth of the family of former zamindar of Venkatagiri, for the assessment yearThe Wealth Tax Officer, while completing the assessment for the year in question included in the assessment the amount of final compensation receivable from the Government not only by the holder of the estate but also by his sons. The amount of compensation as per data sheet made available to the Wealth Tax Officer worked out to Rs.From this amount the Wealth Tax Officer deducted 1/6th which was payable to the maintenanceholders and brought the balance of Rs.as the net wealth of the assessee H.U.F., to tax. The holder of the estate contended that the compensation payable to his sons under Section 45 of the Act cannot be considered as the wealth of the H.U.F., But that contention was rejected by the Wealth Tax Officer. The order of the Wealth Tax Officer was reversed by the Appellate Assistant Commissioner. The Appellate Assistant Commissioner came to the conclusion that the compensation payable to the sons of the holder cannot be considered as the wealth of the assessee. The order of the Appellate Assistant Commissioner was affirmed by the Tribunal.

Reasoning: 5. To summarise the effect of S. 48, though the Estate belonged to the holder exclusively, the Act deems it as the Estate belonging to the family of the holder and further that the holder as well as his legitimate sons are considered as the sharers in that estate. The section provides that after making the disbursements prescribed in that section, the balance of the compensation amount will be distributed among the holder and his legitimate sons in accordance with the provisions contained in the Act.Reading S. 45 and S. 49 together, there is no doubt that the compensation paid or payable to the sons of the holder is the absolute property of those sons. For that amount the holder has no right whatsoever. We asked Mr. S. T. Desai, the learned counsel appearing for the Revenue, whether the holder could call upon his sons to reimburse him the compensation paid to them. He rightly conceded that, he could not do so. We have no doubt that the compensation paid to the sons is their absolute property and in that compensation the holder has no right whatsoever, Hence it is impossible to say that the compensation paid or payable to the sons can be considered as a wealth of the holder or his family. Mr. Desai contended that it is not the case of the holder that there was any partition wholly or partly in his family and, therefore, we should proceed on the basis that the compensation paid or payable to the sons is the compensation paid or payable to their family. That contention is wholly unacceptable. Section 45 proceeds on the basis that there is a statutory partition between the father and the sons in so far as the payment of compensation is concerned and the amount paid or payable to the sons is their exclusive property. Whether there was partition in respect of other properties or not, so far as the compensation amount is concerned, we must proceed on the basis that there was a partition between the father and the sons. It is true that Section 45 proceeds on the basis that the holder and his sons constituted a joint family and the estate belonged to the joint family, but this is only for the purpose of the Act. It is true that a fiction created for a particular purpose cannot be extended beyond that purpose. This is a well accepted position in law. But that principle of law is of no assistance to the Revenue. Herein as mentioned earlier when the compensation amount is paid or is made payable to the sons, the same became their absolute property.