Deductibility of the additional income-tax liability arising as a result of settlement proceedings u/s.271(4A) of the I.T.Act. - Income Tax - 153/CBDT

INSTRUCTION NO 153/CBDT, Dated: April 3, 1970 Section(s) Referred: 2(m) ,271(4A) Statute: Wealth Tax Act, 1957 By their letter F.No.7/6/66-W.T. dated the 13th March, 1968, the Board have issued instructions that the tax liability in respect of the income voluntarily disclosed u/s.68 of the Finance Act, 1968 should not be deducted as a "debt", while computing the net wealth of an assessee as on any valuation date preceeding the date of disclosure. The position with regard to the deductibility of the additional income-tax liability arising as a result of settlement proceedings u/s.271(4A) of the I.T.Act however stands on a different footing. The Board have been advised that the additional income-tax liability determined for each assessment year in the course of settlement proceedings is deductible as a debt owed on the valuation date relevant to the respective assessment year and should therefore be deducted from the net wealth determined for that year. The above position follows from the principles laid down by the Supreme Court in the case of Kesoram Industries[59 ITR 767], Damodar Bhat(71 ITR 806) and Ishwarlal Giridharilal Parikh(70 ITR 98). 2. The Board desire that suitable instructions may be issued to all Wealth-Tax Officers working in CIT's charge in the light of the above clarification.