1977 (2) TMI 23 - HC - Wealth-tax

Summary

Issues involved:
The issue involves the admissibility of the assessee's claim for exemption in respect of agricultural land during reassessment u/s 17(1)(a) of the Wealth-tax Act, 1957.

Comprehensive Details:

1. Background and Original Assessment:
The deceased assessee, a partner in a firm owning agricultural property, had his interest in the property included in the net wealth during the original assessment for the relevant year. The Wealth-tax Officer later reopened the assessment due to non-inclusion of land acquisition compensation. The legal representatives contended that the value of the deceased's interest in the firm was wrongly computed in the original assessment.

2. Reassessment Proceedings:
During reassessment, the legal representatives claimed a deduction representing the deceased's share in the agricultural estate owned by the firm. The Wealth-tax Officer rejected the claim, stating that the original assessment had become final, and the new claim could not be entertained during reassessment.

3. Tribunal's View and Question of Law:
The Income-tax Appellate Tribunal emphasized the concept of net wealth and the officer's obligation to reassess the net wealth according to the Act during reassessment. The Tribunal held that the assessee was justified in requesting the exclusion of the value of the agricultural estate, leading to the formulation of the question of law for the High Court's opinion.

4. High Court's Analysis and Decision:
The High Court analyzed the provisions of section 17 of the Wealth-tax Act, emphasizing that reassessment jurisdiction is limited to assessing the escaped net wealth as per the Act's requirements. The Court disagreed with the Tribunal's view that the assessee could ask for a recomputation of net wealth during reassessment. Citing precedents under the Income-tax Act, the Court held that claims disallowed during the original assessment cannot be reagitated during reassessment for previously unassessed income.

5. Conclusion:
The High Court answered the question referred in the negative, favoring the department and rejecting the assessee's claim for exemption. The Court highlighted that claims disallowed in the original assessment cannot be revisited during reassessment for escaped income. The judgment will be communicated to the Income-tax Appellate Tribunal, Cochin Bench, as per legal requirements.