Back
SUPREME COURT OF INDIA
R.S. PATHAK AND E.S. VENKATARAMIAH, JJ.
Commissioner of Wealth-tax, Ahmedabad, Appellant
Versus
Kantilal Manilal etc. etc., Respondents.
Civil Appeals Nos. 1311 and 1312 of 1973, D/- 13-3-1985.
Advocates appeared
Mr. S. C. Manchanda, Sr. Advocate, Mr. B. B. Ahuja, Mr. R. N. Poddar, Miss A. Shubhashini, Advocates with him for Appellant; Mr. S. T. Desai, Sr. Advocate, Mrs. A. K. Verma, Mr. K. J. John, Advocates with him, for Respondents.
Wealth-tax Act - Section 2(m)(iii)(a), 14 to 17A, 29, 30 - Estate Duty Act, 1953 - Expenditure Tax Act, 1957 - Gift-tax Act, 1958 - Indian Income-tax Act, 1922 - Income Tax - Wealth Tax - Wealth Tax Assessment - Claimed a Deduction - Assessee claimed a deduction of certain sums representing estimated liabilities on account of income tax and wealth tax - Claim was rejected by Wealth-tax Officer in both assessments, On appeal by assessee, Appellate Assistant Commissioner of Wealth Tax allowed a part of claim - In appeal pertaining to assessment he allowed a deduction of Rs. 22,679/- on account of wealth tax relating to assessment year Rs. 36,692/- on account of wealth tax relating to assessment year. and Rs. 2,25,053/- on account of income tax for the assessment year - In appeal pertaining to assessment year, Appellate Assistant Commissioner allowed, total claim of Rs. 9,02,377/-, comprising a deduction of Rs. 39,692/- on account of wealth tax relating to assessment year, Rs. 77,716/- on account of wealth tax for assessment year and balance on account of income tax for assessment year - Whether provisions of S. 2(m)(iii)(a) of Wealth-tax Act barred deduction of wealth tax liabilities claimed by assessee High Court held that as liabilities were not outstanding on respective valuation dates S. 2(m)(iii)(a) was not attracted even though assessee had challenged in appeal that liabilities were not payable by him - Whether for purposes of attracting S. 2(m)(iii)(a) it is not sufficient that tax liability has accrued and it is necessary that a tax demand should have been made by. assessing authority - Whether it is a necessary requirement of provision that appeal, revision or other proceeding should be pending on valuation date itself or it suffices that appeal - Whether statutory remedy is being availed of on valuation date – Held, In present case appeal against wealth tax assessment order for assessment year was filed and appeal against wealth tax assessment order for the assessment year was filed - Both appeals were filed, therefore, after respective valuation dates, corresponding to assessment years under reference - But for S. 2(m)(iii) an amount of a tax outstanding on valuation date would constitute a debt owed by assessee on valuation date, and assessee would be entitled to claim its deduction in process of computing his net wealth - Parliament, however, intended that if amount of tax was challenged by assessee as not being payable by him by recourse to any of statutory remedies prescribed in relevant Act, such claim to deduction would be barred - However, as in order to invoke bar prescribed by S. 2(m)(iii)(a), it is necessary for Revenue to establish that both requirements are satisfied, that is to say, that an amount of tax is, outstanding on valuation date and further that amount is claimed by assessee in an appeal as not being payable by him, and Revenue has been unable to show that in present case sums of Rs. 22,679/- and Rs. 39,692/- representing wealth tax liabilities for assessment years were outstanding on respective valuation dates corresponding to assessment years under reference, Revenue Must fail - Appeals dismissed.
Judgment
PATHAK, J. :- These appeals are directed against the judgment of the Gujarat High Court disposing of a wealth tax reference and answering the following question of law against the Revenue :
"Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the provisions of S. 2(m)(iii)(a) were not applicable in respect of liabilities arising under the wealth tax assessments of the assessee for the assessment years 1960-61 and 1961-62?"
2. For the purpose of determining the assessees net wealth in assessment proceedings under the Wealth-tax Act in respect of the assessment years 1961-62 and 1962-63, the corresponding valuation dates being March 31, 1961 and March 31, 1962, the assessee claimed a deduction of certain sums representing the estimated liabilities on account of income tax and wealth tax. The claim was rejected by the Wealth-tax Officer in both assessments, On appeal by the assessee, the Appellate Assistant Commissioner of Wealth Tax allowed a part of the claim. In the appeal pertaining to the assessment year 1961-62, he allowed a deduction of Rs. 22,679/- on account of wealth tax relating to the assessment year 1960-61, Rs. 36,692/- on account of wealth tax relating to the assessment year 1961-62. and Rs. 2,25,053/- on account of income tax for the assessment year 1961-62. In the appeal pertaining to the assessment year 1962-63, the Appellate Assistant Commssioner allowed the, total claim of Rs. 9,02,377/-, comprising a deduction of Rs. 39,692/- on account of wealth tax relating to the assessment year 1961-62, Rs. 77,716/- on account of wealth tax for the assessment year 1962-63 and the balance on account of income tax for the assessment year 1962-63. The Revenue appealed to the Appellate Tribunal. In the appeal for the assessment year 1961-62 it contended, inter alia, that the assessee was not entitled to a deduction of the wealth tax liability of Rs. 22,679/- in respect of the assessment year 1961-62 because he had disputed the said liability in appeal and, therefore, the deduction was barred by reason of S. 2(m)(iii)(a) of the Wealth-tax Act. Similarly, in the appeal for the assessment year 1962-63, the Revenue urged that the assessee was not entitled to a deduction of the wealth tax liability of Rs. 39,692/- for the assessment year 1961-62 as he had disputed that liability in appeal and the deduction was barred by S. 2(m)(iii)(a) of the Act. The Appellate Tribunal did not accept the contention of the Revenue and held that S. 2(m)(iii)(a) was not attracted in, respect of those liabilities as they had not become payable on the relevant valuation dates. At the instance of the Revenue, a reference, being Wealth Tax Reference No. 20 of 1970, was made to the Gujarat High Court for its opinion on the question of law set forth earlier.
3. It may be mentioned that another question was also framed in that reference, and that this reference as also several other references were disposed of together by the Gujarat High Court by its judgment in Commr. of Wealth-tax v. Kantilal Manilal (1973) 88 ITR 125 : (1973 Tax LR 754). Against that judgment corresponding special leave petitions were filed by the Revenue in this Court, but all the special leave petitions, except Special Leave Petitions (Civil) Nos. 505 and 506 of 1973, arising out of Wealth-tax Reference No. 20 of 1970, were dismissed on the merits, and. in respect of these two special leave petitions the grant of special leave was restricted to the consideration of the question set forth earlier.
4. While dealing with the question whether the provisions of S. 2(m)(iii)(a) of the Wealth-tax Act barred the deduction of the wealth tax liabilities claimed by the assessee the High Court held that as the liabilities were not outstanding on the respective valuation dates S. 2(m)(iii)(a) was not attracted even though the assessee had challenged in appeal that the liabilities were not payable by him.
5. In these appeals, Shri S. C. Manchanda,
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
