1984 (4) TMI 28 - HC - Income Tax

Summary

Issues Involved:
1. Inclusion of Rs. 82,264 in the wealth of the assessee for the assessment years 1968-69 to 1971-72.

Detailed Analysis:

Issue 1: Inclusion of Rs. 82,264 in the Wealth of the Assessee for the Assessment Years 1968-69 to 1971-72

The Income-tax Appellate Tribunal, Jaipur Bench, referred the question of whether Rs. 82,264 should be included in the wealth of the assessee for the assessment years 1968-69 to 1971-72. The legal representatives of the deceased assessee were brought on record following his death.

The core of the issue revolves around the refund of Rs. 82,264, which arose because the assessee had deposited excess advance tax in response to a demand notice issued by the Income Tax Officer (ITO) under Section 210 of the Income Tax Act, 1961. The final tax determined was much less, entitling the assessee to a refund of Rs. 82,264. The ITO included this amount in the net wealth of the assessee for the relevant assessment years.

The Tribunal, however, deleted the amount from the assessments, leading to the Revenue filing a reference application under Section 27(1) of the Wealth Tax Act, 1957.

The court examined whether the assessee had any right, interest, or lien over the amount of Rs. 82,264 before the final assessment order was made on February 10, 1972. It was determined that until the assessment was finalized, the assessee had no right or interest in the excess amount deposited. The right to a refund accrued only after the finalization of the assessment order for the assessment year 1967-68.

The court referred to the definition of "valuation date" under the Wealth Tax Act and noted that the valuation dates for the relevant assessment years were March 31, 1968, March 31, 1969, March 31, 1970, and March 31, 1971. The court also reviewed Section 14, which deals with the return of wealth, and Section 16, which outlines the assessment procedure.

The court cited precedents, including the Gujarat High Court's decision in CWT v. Raipur Manufacturing Co. Ltd. and the Supreme Court's decisions in CWT v. Standard Vacuum Oil Co. Ltd. and Assam Oil Co. Ltd. v. CWT. These cases established that a debt must be a present obligation to pay a sum of money, whether ascertained or not, and that advance tax paid under a statutory demand notice is not considered part of the assessee's wealth until a refund order is made.

The court concluded that the assessee had no claim or title to the amount of Rs. 82,264 before February 10, 1972, and thus, it could not be included in the net wealth of the assessee on the valuation dates for the assessment years 1968-69 to 1971-72.

The question referred to the court was answered in the affirmative, in favor of the assessee and against the Revenue. There was no order as to costs, and the office was directed to take action in accordance with Section 27(6) of the Wealth Tax Act.