1990 (12) TMI 160 - AT - Wealth-tax

Issues Involved:

1. Inclusion of IT refunds in net wealth.
2. Inclusion of deposits in minor children's names in net wealth.
3. Exemption of silver cups and trophies as works of art.
4. Valuation of unquoted equity shares.
5. Inclusion of compulsory deposits in net wealth.
6. Allowance of debts related to exempt assets.

Issue-wise Detailed Analysis:

1. Inclusion of IT Refunds in Net Wealth:

In WTA No. 1021/Mds/87, the Department's appeal contested the deletion of Rs. 11,305 from the net wealth of the assessee by the AAC. The Department argued that the excess advance tax paid for the assessment year 1976-77 should be included in the net wealth based on precedents from the Madras High Court and the Supreme Court. The Tribunal accepted the Department's contention, referencing the Madras High Court's decision in T.V. Srinivasan vs. CWT, which held that excess advance tax paid should be considered an asset and included in the net wealth, regardless of whether a refund order was passed by the valuation date.

In WTA No. 1022/Mds/87 and Co No. 144/Mds/77, the Tribunal upheld the Department's appeal, setting aside the AAC's order that deleted the addition of Rs. 62,316 towards IT refunds. The Tribunal followed the Madras High Court's decision in T.V. Srinivasan vs. CWT.

In WTA No. 1023/Mds/87, the Tribunal again upheld the Department's appeal, setting aside the AAC's deletion of Rs. 62,316 towards IT refunds, following the same precedent.

In WTA No. 1024/Mds/87, the Tribunal reversed the AAC's deletion of Rs. 32,986 towards IT refunds, following the Madras High Court decision.

In WTA No. 1025/Mds/87, the Tribunal upheld the Department's appeal, restoring the inclusion of Rs. 32,986 towards IT refunds in the net wealth, following the same legal precedent.

2. Inclusion of Deposits in Minor Children's Names in Net Wealth:

In WTA No. 1022/Mds/87, the Tribunal set aside the AAC's deletion of Rs. 29,500 deposited in the names of minor children and remanded the matter back to the AAC for reconsideration in light of the IT appellate order for the assessment year 1976-77.

In WTA No. 1023/Mds/87, the Tribunal also remanded the issue of deposits in minor children's names amounting to Rs. 42,825 back to the AAC for reconsideration.

3. Exemption of Silver Cups and Trophies as Works of Art:

In CO No. 144/Mds/87, the Tribunal rejected the assessee's contention that silver cups and trophies should be exempt from wealth tax as works of art under Section 5(1)(xii). The Tribunal followed its earlier decision in WTA No. 256/Mds/84, which held that such items, even if kept as pride of possession, do not qualify for exemption as works of art.

In CO No. 145/Mds/87, the Tribunal dismissed the assessee's cross-objection regarding the inclusion of Rs. 95,770 towards the value of silver cups and trophies, following the same reasoning.

In CO No. 146/Mds/87, the Tribunal upheld the inclusion of Rs. 4,500 towards the value of silver cups and trophies, rejecting the exemption claim.

In CO No. 147/Mds/87, the Tribunal dismissed the cross-objection regarding the inclusion of Rs. 5,750 towards the value of silver cups and trophies, following the same precedent.

4. Valuation of Unquoted Equity Shares:

In WTA No. 1023/Mds/87, the Tribunal upheld the AAC's order that allowed the proposed dividend as a liability while valuing unquoted equity shares under Rule 1D of the WT Rules. The Tribunal referenced the Supreme Court decision in Vazir Sultan Tobacco Co. Ltd vs. CIT and the Madras High Court decision in CWT vs. S. Ram.

In WTA No. 1024/Mds/87, the Tribunal dismissed the Department's ground against considering the proposed dividend as a liability, citing the same legal precedents.

In WTA No. 1025/Mds/87, the Tribunal dismissed the Department's ground, upholding the AAC's order to consider the proposed dividend as a liability.

5. Inclusion of Compulsory Deposits in Net Wealth:

In CO No. 147/Mds/87, the Tribunal dismissed the assessee's cross-objection regarding the exclusion of Rs. 42,770 towards compulsory deposits from net wealth. The Tribunal followed the Special Bench decision in Smt. Sushilaben A. Mafatlal vs. WTO, which held that compulsory deposits do not qualify as annuities and should be included in net wealth.

6. Allowance of Debts Related to Exempt Assets:

In CO No. 146/Mds/87, the Tribunal upheld the disallowance of Rs. 97,630 in debts related to race horses, which are exempt assets. The Tribunal cited Section 2(m)(ii) of the WT Act and the Full Bench decision of the Madras High Court in CIT vs. K.S. Vaidhyanathan, which held that debts related to exempt assets cannot be deducted in computing net wealth.

Conclusion:

The Tribunal allowed the Department's appeals in WTA Nos. 1021 and 1022/Mds/87, partially allowed WTA Nos. 1023, 1024, and 1025/Mds/87, and dismissed the Cross Objections 144 to 147/Mds/87. The decisions were primarily based on the legal precedents set by the Madras High Court, the Supreme Court, and the Special Bench of the Tribunal.

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