1968 (5) TMI 2 - HC - Wealth-tax

Valuation date - section 2(q) of the WT Act, 1957 - Tribunal was right in holding that no assessment could be made under the WT Act on the assessee

Summary

Issues:
1. Interpretation of the term "valuation date" under the Wealth-tax Act for the assessment year 1957-58.

Detailed Analysis:
The judgment in question involves a reference under the Wealth-tax Act concerning the assessment year 1957-58, where the assessee, a limited company, sought to change the date of closing its accounts from 31st March to 30th June due to becoming a subsidiary of another company with a different financial year. The Income-tax Officer accepted this change, resulting in the income-tax assessment for 1958-59 being conducted for a fifteen-month period. However, a dispute arose regarding the valuation date for the wealth-tax assessment for the year 1957-58. The Income-tax Officer and the Appellate Assistant Commissioner differed in their interpretations, leading to an appeal to the Tribunal.

The Tribunal held that changing the previous year's end from March to June would alter the valuation date accordingly. As the Wealth-tax Act came into force from April 1, 1957, a valuation date before this, such as June 30, 1956, would not permit a wealth-tax assessment for the year 1957-58. The Tribunal dismissed the department's appeal based on this reasoning.

The matter was then brought before the High Court, where the issue centered on the interpretation of the term "valuation date" as defined in section 2(q) of the Wealth-tax Act. The department argued that the valuation date should align with the end of the previous year for income-tax assessment, either March 31, 1957, or June 30, 1956. However, the assessee contended that the change in the accounting year precluded the existence of a previous year for income-tax purposes for the year 1957-58, thus affecting the valuation date for wealth-tax assessment.

The High Court considered the provisions of the Income-tax Act, 1922, particularly section 2(11), and referred to a Supreme Court decision regarding the determination of the previous year. It was concluded that by accepting the assessee's proposal to assess income for a fifteen-month period for the assessment year 1958-59, the Income-tax Officer effectively established that period as the previous year. Consequently, there was no previous year for income-tax purposes for the year 1957-58, leading to the absence of a corresponding valuation date for wealth-tax assessment. The Court upheld the decision of the Appellate Assistant Commissioner, ruling in favor of the assessee.

In conclusion, the High Court answered the referred question in the affirmative, supporting the assessee's position and emphasizing the impact of changing the accounting year on determining the valuation date for wealth-tax assessment.