724/CBDT. - Income Tax - 724/CBDT

INSTRUCTION NO. 724/CBDT Dated : July 25, 1974 Section(s) Referred: 2(m) , Rule 2 of W.T Rules Statute: Wealth Tax Act, 1957 Reference in invited to Board's Instruction No. 545 dated the 10th May, 1973 (issued from file No. 321/25/72-WT). It was stated therein that the decision of the Allahabad High Court in the case of C.W.T.vs. Shri Padampat Singhania that 'net wealth' under Rule 2 was to be determined in accordance with commercial principles and not in accordance with the definition given in section 2 (m) of the Wealth-tax Act had not been accepted and application for leave to appeal to the Supreme Court had been authorised. The High Court have since rejected the application for leave to appeal to Supreme Court. Special Leave petition has also not been filed. The decision of the High Court would, therefore, be binding in Lucknow and Kanpur charges. However, this decision may not be applicable in respect of assessments for the assessment year 1968-69 and onwards, in view of clause (m) of Rule 1A of the Wealth-tax Rules (inserted in October, 1967) which reads as under:- "All other words and expressions used but not defined in these Rules and defined in the Act shall have the meanings respectively assigned to them in the Act." Further, in the case of the same assessee namely Shri Padampat Singhania for a subsequent assessment year or in the case of any other assessee where the question of interpretation of the expression 'net wealth' in Rule 2 of the wealth-tax Rules is involved and any appeal has been decided, an attempt could be made to take the matter to the High Court and the Court may be requested to reconsider their earlier decision in the light of the decision of the Madras High Court in the case of C.W.T. vs. Vasantha, executrix to the estate of K.V.A.L.M. Ramanathan Chettiar (87 ITR 17). If the Tribunal refuses to state a case, the High Court may be requested to direct the Tribunal to state a case. While doing so, the judgment of the Madras High Court may be brought to their notice and it may be submitted that as contrary views have been expressed by the two High Courts, it may be desirable to reconsider the earlier decision. If the High Court does not agree to reconsider the decision, the matter can than be considered for filing a special leave petition to the Supreme Court. While moving the matter before the Tribunal and the High Court, the decision of the Madras High Court (87 ITR 17) may be cited at length.