733/CBDT. - Income Tax - 733/CBDT

INSTRUCTION NO. 733/CBDT Dated : August 8, 1974 Section(s) Referred: 58 of Finance Act , 44 of Estate Duty Statute: Wealth Tax Act, 1957 Attention is invited to Board's Instruction No. 659 dated the 14th February, 1974 issued from File No. 321/54/73-W.T. It was stated in the instruction that in cases where the spread over of the income disclosed u/s 68 of the Finance Act, 1965 was accepted by the Department, the consequential deduction of tax payable on the said income should be allowed as a deduction for the relevant valuation dates. 2. The Gujarat High Court have delivered a judgment in the case of CWT, Gujarat-I vs. Ahmed Ibrahim Sahagaria (93 ITR 288) wherein they have held that tax paid on income disclosed u/s 68 of the Finance Act, 1965 is in satisfaction of a new liability to tax in respect of a particular item of income, which arises for the first time u/s 68 of the Finance Act, 1965, and, therefore, for the purpose of computing the net wealth of the assessee it cannot be deducted as a debt owed by the assessee on the last day of the relevant accounting year in which such concealed income was earned. In view of this judgment of the Gujarat High Court, the Board's Instruction no. 659 is under review. Meanwhile, it is requested that the matters in which adverse decisions are given regarding allowability of tax paid u/s 68 of the Finance Act, 1965 for valuation dates proir to 1-3-1965 may be kept alive by filing reference application/leave petitions etc.