Holding

The properties were not assets under Section 2(e)(2)(iii) of the Wealth Tax Act, 1957 because the post‑expiry tenancy was precarious and the interest was not available to the assessee for a period exceeding six years.

Summary

F.S. Gandhi, the deceased, owned several lease‑hold properties in Allahabad. The leases expired in 1958 and 1963 and the Government of Uttar Pradesh served notices to vacate, but the assessee continued to occupy the premises under a month‑to‑month tenancy and collected rent. The Wealth Tax Officer, the Appellate Assistant Commissioner and the Income Tax Appellate Tribunal valued the properties at varying multiples of annual rent, leading to a dispute over whether the interest was an "asset" under Section 2(e)(2)(iii) of the Wealth Tax Act, 1957. The Tribunal referred two questions of law to the Allahabad High Court, which held that the post‑expiry tenancy was an asset because the interest was available for more than six years. The Supreme Court reversed, interpreting the phrase "is available … for a period not exceeding six years" to mean that the interest must be presently available and remain so for no more than six years from the date it vests; the month‑to‑month tenancy was precarious and not available for over six years. Consequently, the properties were not assets and their valuation was excluded from the assessee’s net wealth. The appeals were allowed and the High Court judgment on the two questions was set aside.

Issues considered

Whether properties whose leases had expired and were held under a month‑to‑month tenancy constitute "assets" within the meaning of Section 2(e)(2)(iii) of the Wealth Tax Act, 1957.
Whether the interest in such properties was available to the assessee for a period exceeding six years from the date the interest vested, for the purpose of the same provision.

Legislation cited

Finance Act, 1969s. Section 2(e) (sub‑clause (v))
Transfer of Property Act, 1882s. 106, s. 116
Urban Ceiling Act, 1976
Wealth Tax Act, 1957s. 2(e)(2)(iii)
Wealth‑tax (Amendment) Act, 1964s. 2(e)(v)

Subjects

Wealth TaxAsset definitionLeasehold propertyTenancySection 2(e)Six‑year ruleTransfer of Property ActStatutory interpretation

Judgment

A F.S. GANDHI (DEAD) BY LRS.
V.
COMMISSIONER OF WEALTH TAX, ALLAHABAD

MAY 2, 1990
B
[KULDIP SINGH AND S.C. AGRAWAL, JJ.]

Wealth Tax Act, 1957: Section 2(e) 2(iii)-Interest in respect of
properties-Lease of lands on which properties were standing
expired-Tenancy continued on month to month bas'is for unstated
period-Whether liable to tax.
c
Words and Phrases-'Js' and 'has been'-meaning of

The appellant-assessee owned certain properties on lease-hold
-i
' -
lands. The leases in respect of these lands expired in 1958 and 1963 and
the lessor-State Government issued notices to the assessee to hand
D
over vacant possession of the leasehold lands. The properties were let
out to the tenants and the assessee was receiving rental income from the
same.

In the Wealth Tax Returns for the assessment years 1971-72,
1972-73, 1973-74 and 1974-75, the assessee valued the properties at ten
E
times of the annual rental income. In the assessment order the Wealth
Tax Officer 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.
F
On further appeal, the Income Tax Appellate Tribunal valued the
properties at ten times of the annual rental income, but, at the request
of the assessee, referred to the High Court for its opinion certain ques-
tions of law, including the questions whether the Tribunal was right in
holding that the properties in respect of which the leases had expired in
1958 and 1963 and notices h3d been issued to hand over the possession were
G
assets within the meaning of Section 2(e)(v) of the Wealth Tax Act, 1957
and its value was liable to be included in the net wealth of the assessee
and that, on correct interpretation of Section 2(e)(v) of the Wealth Tax •
Act, and relevant provisions of the Transfer of Property Act, the in·
terest of the appellant in respect of properties in dispute was for a
H period of over six years.

886
F.S. GANDHI v. COMMR. OF WEALTH TAX 887

The High Court held that after the determination of the earlier
A
leases, the assessee was lessee of properties under a new contract of
tenancy, and it was a tenancy from month to month under Section ll6
read with Section 106 of the Transfer of Property Act, and for an
unstated period, and could not be said to be precarious in nature, that
the said tenancy was an asset as defined in Section 2(e) of the Act and
was not excluded under sub-clause (v) because the said interest had B
been available to the assessee for a period exceeding six years from the
date the new contract of tenancy came into existence. It, however,
granted certificate of fitness to appeal to the Supreme Court.

Allowing the appeals, this Court,

HELD: I. The properties in respect of which leases had expired in c
1958 and 1963 and notices had been received by the assessee to hand

r
over the possession were not assets within the meaning of Section
2(e)(2)(iii) of the Wealth Tax Act 1957 and the valuation of the same was
not liable to be included in the net wealth of the assessee. The Tribunal
was not right in holding that the interest of the assessee in respect of the D
properties in dispute was for a period over six years for the purpose of
Section 2(e)(2)(iii) of the Act. [8981'-H.

2.1 The word "available" in Section 2(e)(2)(iii) of the Act 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 the E
present, often has a future meaning. It may also have a past significa-
tion as in the sense of 'has been'. In view of the words "for a period not
exceeding six years" which follow the \'ford "available", the word 'is'
must be construed as referring to the present and the future. In that
sense, it would mean that the interest is presently available and is to be
available in future for a period not exceeding six years. [896C-D] F

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 G
available to the assessee for a period exceeding six years from the date
the interest vests iu the assessee. The construction placed by the High
Court attaching importance to the enjoyment of the interest, instead of
placing emphasis on the nature of the interest is not correct. [894E-G]

2.3 The question as to whether the interest should be included or H
888 SUPREME COURT REPORTS [1990] 2 S.C.R.

A excluded from the assets of the assessee under Section 2(e)(2)(iii) o( the
Act 'bas to be considered in the lildit 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 bas to be
considered by examining the nature of the interest on the date the
interests vests in the assessee. l894G-HJ
B
Commissioner of Wealth Tax v. Smt. Muthukrishna Ammal,
[1969] 2 S.C.R. 1, relied on.

In the instant case, 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 a tenancy from month
c to month for an unstated period. The said tenancy was precarious In
nature because it could be terminated by the lessor, 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
D 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. [897C-D J

E
[Section 2(e)(v), as amended In 1964, was substituted by the
Finance Act,1969 and the relevant provision applicable to the Instant
1
case was Section 2(e)(2)(iii). However, In the reference to the High
Court, the Tribunal referred to sub-clause (v) of clause (e) of Section 2,
as it stood prior to the 1969 amendment and the High Court also did not
notice it. This Court observed that since the provisions of Section 2(e)(v)
as amended in 1964, were Identical with the provisions of Section J
F 2(e)(2)(iii) as substituted b}' the 1969 amendment the error was of no
consequence and examined the matter in the light of the promions contained )
in Section 2(e) as substituted by the 1969 amendment.) [893G-H; 894A)

CIVIL APPELLATE JURISDICTION: Civil Appeal Nos.
3752-3755 of 1982.
G
Appeal by Certificate from the Judgment and Order dated
2.2.1982 of the Allahabad High Court in Wealth Tax Reference No. --'.
179of1978.

S.C. Manchanda, Raja Ram Agarwal, Dr. Meera Agarwal and
H R.C. Mishra for the Appellant.
F.S. GANDHI v. COMMR. OF WEALTII TAX [AGRAWAL, J.] 889

.;L _ the Respondent.
Dr. V. Gauri Shankar, Manoj Arora and Ms. A. Subhashini for A

The Judgment of the Court was delivered by

S.C. AGRAWAL, J. These appeals, by certificate granted by the
B
High Court under Section 29(1) 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, F .S. Gandhi (hereinafter referred to as 'the
assessee'), owns properties situate at Mahatama Gandhi Marg and c
Sardar Patel Marg in Civil Lines area at Allahabad. The lands on
v· which these buildings stand were leased out to the assessee by the
Government of Uttar Pradesh. The leases in respect of these proper-
1
ties, except the property situate at 30-A, Mahatama 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 D
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 assess-
ment yers 1971-72, 1972-73, 1973-74 and 1974-75 the assessee submit-
! ted the Wealth Tax returns wherein he valued the properties at ten
times of the annual rental income. The Wealth Tax Officer passed E
assessment orders wherein he valued the properties at fifteen times of
the annual rental income. On appeal, the Appellate Assistant Com-
missioner of Wealth Tax, valued the said properties at twelve and a
half times of the annual rentral income. On further appeal, the Income
Tax Appellate Tribunal (hereinafter referred to as 'the Tribunal')
valued the properties at ten times of the annual rental income. F

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 G
respect of which le'a'ses had expired in 1958 and 1963
.?'- - and notices had been received to hand over the posses-
sion were assets within the meaning of Section 2(e)(v)
of the Wealth Tax Act and its value was liable to be
included in the net wealth of the assessee?
H
890 SUP~EME COURT REPORTS [1990] 2 S.C.R.

A 2. Whether on correct interpretation of Section 2(e)(v)
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?
.B
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, 19,000?
c
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 ques-
tion was commercial property while other properties
D 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
E excessive and wholly unjustified?" I
•
By order dated February 2, 1982, the High Court answered the
said questions in the affirmative, i.e., in favour of the Department and
against the assessee. Thereafter the assessee moved an application
under Section 29(1) of the Act for grant of certificate of fitness for
F appeal to this Court. By· order dated July 8, 1982, the High Court
granted certificate of fitness on the view that the following question is
a question of law which is of general importance and as such this was a fi!_
case in which an appeal could be filed before this Court:

"Whether on the facts and circumstances of the case the
G Tribunal was right 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 2(e)(v) of the Wealth Tax
Act and its valuation was liable to be included in the net
wealth of the assessee?"
H
F.S. GANDHI v. COMMR. OF WEALTH TAX [AGRAWAL, l.] 891

This question was amongst the questions referred to the High Court . A
..ii__ 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 posses-
sion of the demised premises to the lessor. If he continues
B
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 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 law into in his own hands and evict
c
¥" him. But in case the landlord expresses his assent by
acceptance of rent or otherwise to his continuing in posses-
sion this wrongful possession would be converted into a
D
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
r that of 30-A, Mahatama Gandhi Marg in 1963. The High Court has
observed: E

"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
peaceful possession and enjoyment of these properties all
F
along. In our opinion, therefore, the assent of the landlord
I '
~ to the ·assessee's continuing in possession of these proper-
ties 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 G
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 t_o 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
H
tenancy is an asset. as defined in Section 2(e) of the Act and is not
892 SUPREME COURT REPORTS [1990] 2 S.C.R.

A exciuded under sub-clause (v) be'<ause the said interest has been avail-
able to the assessee fot a period exceeding six years from the date the
new contract of tenancy came into existence.

In the Act, as originally enacted, Section 2(e)(v) read as under:

B "In.this Act, unless the context otherwise requires-

x x x x x x

(e) "assets" includes property of every description, mov-
able or immovable, but does not include-
c x x x x x x
-
(v) any interest in property where the interest is available
to an assesseefor a period not exceeding six years."

D 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
E 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:

F "(e )-"assets" includes property of every description,
movable or immovable, but dos not include-
--·-
}

(1) in relation to the assessment year commencing on the
1st day of April, 1969 or any earlier assessment year-

G (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:

H Provided that the building is on or in the immediate
F.S. GANDHI v. COMMR .. OF WEALTH TAX [AGRAWAL, J.] 893

vicinity of the land is a building which the cultivator orthe
1 receiver of rent or revenue by reason ofhis connection with A
-~
the land requires as a dwelling house or a store-house or an
outhouse;

(iii) animals;
B
(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; c
~-
(2) in relation to the assessment year commencing on the
1st day of April, 1970 or any subsequent assessment year-

(i) animals; D

(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;
r (iii) any interest in property where the interest is available E
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-dause (2) of F
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 G
- 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 2(e)(v) as
amended in 1964 are identical with the provisions of Section
2( e )(2)(iii), as substituted by the 1969 amendment. The error is, there-
fore, of no consequence and the matter has been examined by us in the H
894 SUPREME COURT REPORTS [1990] 2 S.C.R.

light of the provisions contained in clause (e) of Section 2, as sub-
A
stituted in 1969.

Shri R.R. Agarwal, the learned counsel for the appellant, has not
disputed the findings recorded by the High Court that the assessee was
' -~

in possession of the leasehold properties as a tenant holding over and·
B that the said tenancy was a tenancy from month to month for an
unstated period. The submission of Shri Agarwal is that the interest of
the assessee under the said tenancy could not be regarded as an 'asset' 'r
under Section 2(e) of the Act and that it has to be excluded fiecause
the said interest cannot be regarded as an interest available to the

c
assessee for a period exceeding six years from the date the interest
vests in the assessee.

The aforesaid contention of Shri Agarwal involves interpretation
~
-
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 Section 2(e)(2)(iii) of the Act. The word "available" is
D preceded by the word "is" and is followed by the words "for a period
not exceeding six years." The word 'is', although normally referring to
the present often has a future meaning. It may also have a past signifi-
cation 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 --.
E 'is' must be construed as referring to the present and the future. In that
sense it would mean that the interest 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 .--A___
F the assets of the assessee under Section 2( e) of the Act oply 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 sub-
G scribe 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 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
H the interest on the date the interest vests in the assessee.
F.S. GANDHI v. COMMR. OF WEALTH TAX [AGRAWAL, J.] 895

This view of ours finds support from the decision of this Court in
Commissioner of Wealth Tax, Madras v. Smt. Muthukrishna Ammal,
A
[1969] 2 SCR 1 wherein the provisions of Section 2(e)(v) as it stood
prior to the amendment of 1964, have been considered. In that case
the respondent-assessee had obtained on lease from Government cer-
tain 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 B
determined by notice on either side at the close of any salt manufactur-
ing season. In relation to wealth tax assessment years 1959-60, a ques-
tion 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 c
manufacturing season and that the leasehold interest in the salt pans
was not available 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 D
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 2( e) means 'is and has
been available to an assessee for the period of six years before the date
r of valuation.' It was also urged that if interest in property though
revocable has remained unrevoked for more than six years before the E
valuation date, the interest would be an asset within the meaning of
·Section 2(e). This Court rejected the said contention and held as
under:

"We are unable to agree with that contention. The expres-
sion used by Parliament is "is available to an assessee for a F
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 G
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 introduced in
sub-clause (v) of Section 2(e) by the Wealth Tax (Amendment) Act, H
896 SUPREME COURT REPORTS [1990) 2 S.C.R.

A 1964 but did nqt 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
,B vests in the assessee' means that if an interest has been available to the
asses,see 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

C
observed that as a result of the amendment of 1964, Section 2(e)(v)
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 v. Smt. Muthukrishna Ammal, (Supra) has rejected the contention
D 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 avail-
able for a period not exceeding 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
E change which was brought about in Section 2(e)(v) 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
F became the date on which the interest vests in the asseses and, there-
fore, 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
Wea/th Tax v. Smt. Muthukrishna Ammal, (Supra), remained unaltered.
G
In this context, it may also be mentioned that Commissioner of
Wealth Tax v. 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 substituted, was enacted by Parliament
on May 13, 1969. In the amended provisions of clause (e), Parliament
H has repeated the same language, namely, "where the interest is avail-
F.S. GANDHI v. COMMR. OF WEALTH TAX [AGRAWAL, J.[ 897

able to an assessee for a period not exceeding six years" in item (v) of A:
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 v. 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 meaning which has been
B
put upon them by this Court in Commissioner of Wealth Tax v. Smt.
MuthukrishnaAmmal, (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 contract of tenancy and the said tenancy was
a tenancy from month to month for an unstated period. The said
c
-r/ 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 D
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.

f Our attention has been invited to the decision of the Allahabad
E
High Court in Purshottam Dass Tandon and Others v. State of U.P.,
Lucknow and Others, A.LR. 1987 All. 56. From the said decision it

- ~-
I,
appears that a number of petitions were filed in the Allahabad High
Court under Article 226 of the Connstitution 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 renewltl of those
F
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 G
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;
H
898 SUPREME COURT REPORTS I1990] 2 S.C.R. ·
A (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;
B
(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

c
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
-i
-
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
D
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 nothing to show that in
pursuance of the said right fresh leases have been granted by the
E
Government of U.P. in respect of those lands and such leases were avail-
able 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
F
assets within the meaning of section 2(e )(2)(iii) 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 i.e. 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 consi-
G
dered 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
negative i.e., 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 2(e)(2)(iii) of the Act.
H
F.S. GANDHI v. COMMR. OF WEALTH TAX [AGRAWAL, J.[ 899

!n the result the appeals are allowed and the judgment and order A
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.

N.P.V. Appeals allowed.
8

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