1982 (10) TMI 24 - HC - Wealth-tax

Summary

Issues:
1. Allowability of liabilities levied on the firm and the assessee individually as deduction in computing net wealth.
2. Exclusion of liability under section 2(m)(iii) of the Wealth Tax Act, 1957.

Analysis:
For the assessment year 1957-58 and subsequent years, the High Court was tasked with determining the allowability of liabilities imposed on a firm and the assessee individually as deductions in computing net wealth. The Tribunal had held that the liabilities were debts owed by the assessee on the valuation date and therefore should be allowed as deductions. The court referenced the case of Kesoram Industries and Cotton Mills Ltd., where it was established that income tax payable, though quantified later, was a present liability of an ascertainable amount. The court emphasized that the tax liabilities should be considered when calculating the net wealth of the assessee. Section 2(m)(iii) was found not applicable in this case as no order levying income tax had been passed on the valuation dates. The court upheld the Tribunal's decision, stating that each partner had a share in the net assets of the firm, including the concealed income and the corresponding tax liability. The court affirmed the deduction of tax liabilities subsequently levied on the firm and the assessee individually.

Moving on to the assessment years 1960-61 and 1961-62, the court addressed similar questions regarding the tax liabilities imposed on the firm and the assessee individually. The court concurred with the Tribunal's decision that the tax liabilities were debts owed by the assessee on the valuation date and should be allowed as deductions in computing net wealth. Section 2(m)(iii) was again found inapplicable as no order levying income tax existed on the valuation dates. The court upheld the Tribunal's decision to allow the deduction of tax liabilities and ruled in favor of the assessee for these assessment years as well.

In conclusion, the High Court answered both sets of questions affirmatively and in favor of the assessee. The court found that the Tribunal's decisions were correct based on established principles and interpretations of the relevant provisions. The parties were directed to pay their own costs in light of the circumstances of the case. Justice Suhas Chandra Sen concurred with the judgment delivered by Justice Sabyasachi Mukharji.