1985 (2) TMI 114 - AT - Wealth-tax

Summary

Issues:
Inclusion of refund of excess income-tax in the wealth of the assessee for assessment year 1982-83.

Analysis:
The appeal before the Appellate Tribunal ITAT MADRAS-C revolved around the question of whether a sum of Rs. 1,97,107, being a refund of excess income-tax determined after the relevant valuation date, should be included in the wealth of the assessee for the assessment year 1982-83. The Income Tax Officer (ITO) had determined this amount as a refund of income tax payable to the assessee for the said assessment year. The Wealth Tax Officer (WTO) included this amount in the wealth of the assessee for the same year, rejecting the assessee's contention that the refund had not been quantified on the relevant valuation date and therefore should not be considered as an asset for wealth assessment purposes.

Upon appeal, the Appellate Assistant Commissioner (AAC) sided with the assessee, citing a decision of the Gujarat High Court in a similar case. The AAC held that until the ITO quantified the refund, the right to receive the refund did not arise, and thus, the amount should not be included in the assessee's wealth. However, the department appealed this decision.

The Tribunal, after considering the arguments and referring to a decision of the Bombay High Court in the case of CWT v. Keshub Mahindra, concluded that the refund of income tax, even if determined after the valuation date, should be included in the wealth of the assessee for the relevant assessment year. The Tribunal emphasized that the final quantification of tax liabilities should be considered for wealth assessment purposes, as established by the Supreme Court's decision in CWT v. Vadilal Lallubhai. Therefore, the Tribunal upheld the order of the WTO, canceling the decision of the AAC and allowing the department's appeal.

In summary, the Tribunal held that the refund of income tax, determined after the valuation date, should be included in the wealth of the assessee for the assessment year, following the principle that final quantification of tax liabilities is crucial for wealth assessment, as established by relevant court decisions.