1979 (8) TMI 67 - HC - Wealth-tax

Summary

Issues:
Whether the Tribunal was justified in deleting the amount of Rs. 59,48,714 from the assessment under the Wealth-tax Act for the assessment years 1958-59 and 1959-60.

Analysis:
The case involved a dispute regarding the inclusion of an amount of Rs. 59,48,714 in the total wealth of the assessee for the assessment years 1958-59 and 1959-60. This amount arose from a settlement between the assessee and the department due to a detection of concealment of income by the Income-tax Investigation Commission for the years 1939 to 1946. The breakdown of the amount included various components such as inflation in prices, excess purchases, and under-valuation of stock, among others.

The assessee contended that this amount was not available to it during the relevant years as assets. The Wealth Tax Officer (WTO) disagreed and treated the amount as forming an asset of the company. The Appellate Assistant Commissioner (AAC) also ruled against the assessee. The matter was then brought before the Tribunal, which found that the under-valuation of stock had already been adjusted by the assessee in its books. The Tribunal compared this case with a previous decision involving a similar situation and held that the concealed income was not available to the assessee as assets on the valuation dates.

The department argued that since the assessee did not produce the Investigation Commission's report, the amount should be taxed in the assessee's hands. However, the Tribunal found that the amount was not available to the assessee on the valuation date. The court emphasized that for an item to be considered an asset, it should be available to the assessee on the relevant valuation date. Given the circumstances and lack of evidence showing the company retained the assessed income, the Tribunal's decision to delete the amount from the total wealth of the assessee was deemed justified.

In conclusion, the court answered the question in favor of the assessee, allowing the deletion of the amount from the assessment under the Wealth-tax Act. The assessee was awarded costs, and the decision highlighted the importance of the actual availability of an item as an asset on the valuation date for tax assessment purposes.