1987 (1) TMI 140 - AT - Income Tax

Summary

Issues:
Assessability of outstanding remuneration and annuities receivable by a leading film actor for assessment years 1975-76 and 1976-77.

Analysis:
The Appellate Tribunal, ITAT BOMBAY-E, addressed the issue of the assessability of outstanding remuneration and annuities receivable by a leading film actor for the assessment years 1975-76 and 1976-77. The Tribunal initially relied on its Special Bench decisions in N. M. Shah v. Second WTO and Rajendra Kumar Tuli v. Eight WTO, where it held that outstanding remunerations due to the assessee and the market value of annuity policies were not assessable. However, the Revenue contended in a miscellaneous application that the Supreme Court's decision in CWT v. Vysyaraju Badreenearayana Moorthy Raju had overruled the Tribunal's decision in N. M. Shah's case. The Revenue argued that income which had accrued, though not realized, should be included in the net wealth of the assessee. The Tribunal acknowledged the error in its previous decision and agreed that the outstanding remuneration and annuity should be assessable.

The learned counsel for the assessee tried to argue that the decision in N. M. Shah's case was only partially reversed and that specific adjustments in the balance sheet were required under section 7(2) of the Wealth-tax Act. However, the Tribunal clarified that the Supreme Court's decision in Dipti Kumar Basu's case mandated the inclusion of book debts in the balance sheet, even if not entered, for the purpose of making adjustments. Therefore, the Tribunal rectified its previous order, acknowledging the mistake of law in not assessing the outstanding remuneration and annuity for the assessment years in question.

As a result of the rectification, the Tribunal modified its order and restored the matter to the file of the CWT (A) for assessment years 1975-76 and 1976-77. The CWT (A) was directed to determine the quantum of the additions for outstanding remuneration and annuities, considering relevant legal precedents such as CWT v. Yuvraj Amrinder Singh. The Tribunal's decision highlighted the importance of following Supreme Court rulings and ensuring proper assessment of assets for wealth tax purposes.

In a subsequent corrigendum, the Tribunal rectified a mistake in the cause title of its order, clarifying that the miscellaneous application arose out of WTA Nos. 672 & 673/Bom./1982, not R. A. Nos. 2017 & 2018/Bom./1984 as erroneously mentioned by the Revenue in the application.