Law:

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Section 2(e) of the wealth-tax act, 1957-Assets-Interest in property-Assessee leased out its property for ten years-On lessee's failure to hand over possession after expiry of lease, assessee filed suit for getting possession of property and mesne profit, etc.-Suit for possession decreed on 3-11-1962 but decree for payment of mesne profits, etc., Passed only on 2-1-1967-Whether assessee's right to recover mesne profits crystallised as an as set when decree for possession was passed on 3-11-1962 and not on its quantification on 2-1-1967-Held, yes Facts The assessee had leased out a cinema house to a person for a period of 10 years. As the lessee did not hand over possession after the expiry of the lease, a suit was instituted by the assessee to get vacant possession, arrears of rent and mesne profits. The suit was first decreed on 3-11-1962 granting vacant possession to the assessee but the High Court left other points to be decided later. The decree for possession was confirmed by the High Court and the Supreme Court and the premises delivered to assessee on 4-10-1964. On 2-1-1967, a decree was passed for the payment of arrears of rent and mesne profits to the assessee. The High Court confirmed this order. In the appeal against this order, the Supreme Court granted stay. The valuation dates for the assessment years 1964-65 to 1967-68 were 31-12-1963, 31-12-1964, 31-12-1965 and 31-12-1966, respectively. The WTO treated the right to receive mesne profits as an asset in the assessments for these assessment years. Though the AAC confirmed this order, the Tribunal deleted the addition holding that the right to receive mesne profits arose to the assessee only on 2-1-1967 when the District Judge passed the decree and not on any earlier date. On reference: Held The right to recover mesne profits is a chose-in-action which is heritable. It is not a right or interest mentioned in the exclusionary clause of the definition of 'assets' in section 2(e ). This right exists even before the passing of decree in a suit for enforcing the right. The decree only settles the dispute as to the right and quantifies the amount of mesne profits. In the instant case, after the passing of…

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