1994 (12) TMI 23 - HC - Wealth-tax

Summary

Issues Involved:
The judgment addresses two main issues:
1. Valuation of shares of a company for wealth tax purposes, specifically regarding the deduction of advance tax paid by the company from the provision for taxation in the balance sheet.
2. Determination of whether a compulsory deposit is considered an asset under the Wealth-tax Act, 1957.

Valuation of Shares Issue:
The court referred to a previous Supreme Court decision and ruled that advance tax paid by the company should not be deducted from the provision for taxation in the balance sheet when valuing shares for wealth tax purposes.

Compulsory Deposit as an Asset Issue:
The controversy centered around whether a compulsory deposit qualifies as an "asset" under the Wealth-tax Act. The assessee argued that the amount in the Compulsory Deposit Scheme Account was not an asset as per section 2(e) of the Act. However, the Wealth-tax Officer and the Appellate Assistant Commissioner disagreed, considering it an asset. The Appellate Assistant Commissioner directed the inclusion of the actuarial value of the deposit in the net wealth of the assessee. The Tribunal later ruled that the amount in the Compulsory Deposit Scheme Account was not part of the assessee's net wealth. The court analyzed the definition of "assets" under the Act, emphasizing that it includes all types of property unless specifically excluded. The Compulsory Deposit Scheme, under which the deposit was made, provided for repayment with interest after a specified period, making it fall under the broad definition of "property." Consequently, the court concluded that the amount in the Compulsory Deposit Scheme Account should be treated as an asset under the Wealth-tax Act.

In conclusion, the court answered both questions in favor of the Revenue, affirming that advance tax should not be deducted when valuing shares and that a compulsory deposit is indeed considered an asset under the Wealth-tax Act.