2009 (7) TMI 1353 - HC - Income Tax

Summary

Issues involved: Interpretation of Section 2(ea)(vi) of the Wealth Tax Act regarding the treatment of cash-in-hand exceeding Rs. 50,000 in the hands of individual assessees as part of their assets.

Summary:
The High Court of Kerala heard Wealth Tax Appeals filed by the Revenue challenging the Tribunal's decision that cash-in-hand exceeding Rs. 50,000 in the hands of individual assessees does not form part of their assets u/s 2(ea)(vi) of the Wealth Tax Act. The assessees argued that cash-in-hand is a business asset and not to be treated as an asset under the Act. They relied on the Finance Minister's speech and Supreme Court decisions for exemption. The Court analyzed the amendments to the Wealth Tax Act and the recommendations of the Chelliah Committee, which led to the identification of non-productive assets subject to wealth tax. The Court clarified that cash-in-hand exceeding Rs. 50,000 is assessable for individuals and HUF, while for companies, it is the amount not recorded in the books of accounts. The Court rejected the argument that cash-in-hand should be excluded as a productive asset, emphasizing that the Act identifies non-productive assets for taxation. The Court noted that cash in bank accounts is excluded as it is used for business purposes, unlike cash-in-hand. The Court upheld the departmental appeals, ruling that cash-in-hand exceeding Rs. 50,000 held by individual assessees is part of their assets under Section 2(ea)(vi) of the Act.