1988 (9) TMI 84 - AT - Income Tax

Summary

Issues:
1. Disallowance for deduction of tax liability from outstanding remuneration.
2. Valuation of L.I.C. Annuity policies.

Issue 1: Disallowance for deduction of tax liability from outstanding remuneration:
The appeal concerns the disallowance for deduction of tax liability from the outstanding remuneration. The WTO included the entire outstanding amount of fees in the wealth of the assessee. The AAC upheld this decision based on the Supreme Court's ruling in a specific case. However, the assessee argued that the issue in their case differs from the precedent cited by the AAC. The Tribunal, in a previous case, directed the WTO to determine the market value of outstanding fees after obtaining details from the assessee. Following this precedent, the Tribunal directed the WTO to estimate the reasonable value of outstanding fees for the assessee.

Issue 2: Valuation of L.I.C. Annuity policies:
The second issue revolves around the valuation of L.I.C. Annuity policies. The assessee claimed that the annuity policies are exempt under a specific section of the Act and relied on a Supreme Court decision. However, the WTO did not allow the claim and valued the annuities at a higher amount. The AAC also rejected the assessee's claim and upheld the WTO's valuation. The Tribunal, considering a previous case, emphasized the need to verify the nature and terms of the annuity policies to determine their valuation. The Tribunal criticized the lack of discussion by the WTO on the valuation methodology and deductions made. It highlighted the necessity for proper valuation and directed the WTO to refer the matter to the Valuation Officer if rejecting the assessee's valuation. The Tribunal set aside the lower authorities' orders and instructed the WTO to redecide the valuation issue in accordance with law.

In conclusion, the appeal of the assessee was partly allowed, with directions given to reassess both the disallowance for tax liability deduction from outstanding remuneration and the valuation of L.I.C. Annuity policies based on the Tribunal's guidance in previous cases.