720/CBDT. - Income Tax - 720/CBDT

INSTRUCTION NO. 720/CBDT Dated : July 22, 1974 Section(s) Referred: 2 Statute: Wealth Tax Act, 1957 Attention is invited to Board's letter F. No. 328/92/71-WT dated 24th January, 1972 (Instruction No. 373) on the above subject, in which it is stated that the right of chartered accountant, doctor, lawyer or any person following a profession, to receive his fees is a right to property and is, therefore, an asset within the meaning of section 2(e) of the Wealth-tax Act and that the fees outstanding on the valuation date would be liable to wealth-tax even if cash system of accounting is being followed by such a person. 2. The Board have since been advised that the outstanding fees of those advocates who only plead and do not act are not legally recoverable debts and as such are not "assets" within the meaning of the Wealth-tax Act, Instruction No. 373 (F. No. 328/92/71-WT) dated 24th January 1972 is, therefore, modified to this extent viz., the outstanding fees as on the valuation date of the advocates, who only plead and do not act, are not " assets" and are, therefore, not assessable to net wealth. 3. The Advocates who only plead in the original sides of Calcutta and Bombay High Courts on the instructions of solicitors and do not act and the advocates in the Supreme Court who are not advocates on record of that court and who only plead on the instructions of the advocates on record and do not act, fall in the category of "advocates who only plead and do not act". In these cases, there will be no contract, express or implied, between the said pleading advocates and lay clients for payment of the former's fees. Nor will there be any such contract between the pleading advocates of the one part and solicitors or advocates on record, as the case may be, of the other part for payment of the said pleading advocates fees. The said pleading advocates look to the solicitors or the advocates on record, as the case may be, for the payment of their fees, but the matter of payment of such fees has always been and continue to be a matter of honour and not of legal obligation. To this category will also belong senior or fairly senior advocates generally throughout India having good practice who are in fact, briefed by Junior advocates and who, in fact, only plead and do not act and act look to such Junior advocates for payment of fees. The outstanding fees of advocates, other than pleading advocates referred to above, and the outstanding fees of solicitors are, however, assets" within the meaning of the Act. 4. This may please be brought to the notice of the Wealth-tax Officers working in the charge. Pending cases may be dealt with in the light of what is stated above but closed cases need not be revised.