1971 (7) TMI 135 - SC - Income Tax

Goods on High Seas in transit to India are outside India within the meaning of section 6(i) - Accordingly they are not required to be included in the net wealth of a non-resident assessee - Revenue s appeal dismissed

Summary

Issues:
Whether goods in transit from England to India belonging to a non-resident assessee can be considered as wealth of the assessee during the relevant valuation dates.

Analysis:
The judgment delivered by the Supreme Court in this case revolves around the question of whether goods in transit from England to India, owned by a non-resident assessee, should be considered as part of the assessee's wealth during the relevant valuation dates. The relevant assessment years in question are 1957-58, 1958-59, and 1959-60. The assessee, a non-resident company, had goods on the High Seas during the valuation dates, prompting the debate on whether the value of these goods should be factored into the computation of the assessee's net wealth.

Section 3 of the Wealth-tax Act, 1957, serves as the charging section for wealth tax, specifying that tax shall be imposed on the net wealth of individuals, Hindu undivided families, and companies. Net wealth, as defined in section 2(m), is the excess of the aggregate value of all assets over the aggregate value of debts. However, the provisions of the Act concerning non-resident assessees are controlled by section 6, which states that the value of assets and debts located outside India shall not be considered in computing the net wealth of non-residents.

Given that the assessee in this case is a non-resident company, the restrictions outlined in section 6 must be taken into account when calculating its net wealth. The judgment clarifies that the High Seas cannot be deemed part of India unless specified in the Act. While arguments were made regarding the situs of goods on the High Seas, referencing Dicey's Conflict of Laws, the court emphasized that such observations are irrelevant to the interpretation of section 6 of the Act. The court highlighted that the scope of section 6 is clear and unambiguous, and the High Seas should be considered outside India for the purposes of wealth tax assessment for non-resident assessees.

Ultimately, the court dismissed the appeals brought by special leave, asserting that there was no merit in the arguments presented. The discretion to grant or refuse relief in such appeals lies with the court, and in this instance, the appeals were deemed to lack merit and were thus dismissed with costs awarded to the respondent.