1988 (9) TMI 87 - AT - Wealth-tax

Summary

Issues:
1. Liability towards purchase tax provision
2. Exemption claim for foreign-made car under section 5(1)(viii)
3. Inclusion of industrial subsidy in net wealth

Analysis:

Issue 1: Liability towards purchase tax provision
The dispute revolves around the provision made for purchase tax liability by the assessee in the wealth-tax assessments for the years 1979-80 and 1980-81. The Wealth-tax Officer added the provision amount to the net wealth, contending that the exemption under section 5(3) of the Central Sales Tax Act rendered the liability void. The assessee argued that the liability existed until the conditions for exemption were met, citing past Tribunal decisions supporting their claim. The Tribunal considered the impact of a sales tax assessment showing exemption granted, emphasizing that liability must be real and not contingent. Ultimately, the Tribunal held that the provision made by the assessee was based on an apprehension and a contingent liability, thus disallowing the claim and restoring the additions made by the Wealth-tax Officer.

Issue 2: Exemption claim for foreign-made car
The second issue pertains to the inclusion of a foreign-made Toyota car in the balance sheet as a business asset and the assessee's claim for exemption under section 5(1)(viii) of the Wealth Tax Act. The assessee contended that the car was a personal asset, included in the balance sheet for presentation purposes only. However, the revenue argued that since the car was a business asset, depreciation was not claimed, making it taxable under the law. The Tribunal upheld the revenue's stance, emphasizing that treating the car as a business asset in the balance sheet precluded it from being considered a personal asset for exemption purposes.

Issue 3: Inclusion of industrial subsidy in net wealth
The final issue concerns the industrial subsidy received by the assessee, which was included in the net wealth by the authorities. The Tribunal noted that a similar issue had been addressed in a prior assessment year, where the claim was rejected. Following the precedent set in the earlier case, the Tribunal upheld the decision to include the industrial subsidy in the net wealth for the relevant years.

In conclusion, the Tribunal dismissed the appeals by the assessee, allowed the appeals by the revenue, and rejected the cross-objections filed by the assessee, thereby concluding the wealth-tax assessments for the respective years.