1980 (3) TMI 116 - AT - Wealth-tax

Summary

Issues:
1. Whether the deduction claimed by the assessee for tax liability on voluntarily disclosed income under the Voluntary Disclosure of Income and Wealth Ordinance of 1975 should be allowed for the assessment year 1976-77.
2. Interpretation of the relevant provisions of the Voluntary Disclosure of Income and Wealth Ordinance of 1975 in relation to the tax liability arising from voluntary disclosure.
3. Comparison of judicial precedents regarding the treatment of tax liability on voluntarily disclosed income for the purpose of computing net wealth assessable under the Wealth Tax Act.

Detailed Analysis:
1. The appeal was filed against the order of the AAC of Wealth-tax, confirming the assessment made by the WTO under section 16(3) of the Wealth Tax Act, 1957 for the assessment year 1976-77. The assessee had voluntarily disclosed income under the 1975 Ordinance, including the value of stock-in-trade. The WTO disallowed the deduction claimed for tax liability on the disclosed income, leading to an appeal by the assessee.
2. The assessee contended that the tax liability should be allowed as the disclosure was not post the relevant valuation date. The authorized representative relied on a Kerala High Court decision supporting the claim. In contrast, the departmental representative argued that the liability arose only upon filing the declaration after the valuation date, citing a Gujarat High Court decision.
3. The Tribunal analyzed the provisions of the Voluntary Disclosure Ordinance and referred to the Kerala High Court decision, which held that tax liability on voluntarily disclosed income should be considered a debt owed on the relevant valuation date. The Tribunal noted dissenting views from other High Courts but followed the Kerala High Court precedent. Consequently, the Tribunal held in favor of the assessee, allowing the deduction claimed and directing the modification of the assessment.

In conclusion, the Tribunal allowed the appeal, emphasizing the treatment of tax liability on voluntarily disclosed income under the Voluntary Disclosure Ordinance of 1975 as a debt owed on the relevant valuation date. The decision aligned with the Kerala High Court precedent, supporting the assessee's entitlement to the deduction claimed.