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TMI Blog1990 (12) TMI 160X X X X Extracts X X X X X X X X Extracts X X X X ..... refund due for asst. yr. 1976-77 encashed in July, 1979 Rs. 11,305 Total Rs. 33,856 In appeal, the AAC, C-Range, Madras, deleted Rs. 11,305 and confirmed the addition of Rs. 22,551. The deletion of Rs. 11,305 was ordered on the ground that the assessment for 1976-77 was not made before the valuation date relevant for the asst. yr. 1978-79 (31st March,1978). However, it is not made clear when the It assessment and refund for the asst. yr. 1976-77 were made and granted. The Department in this second appeal contended that the excess of advance tax paid for asst. yr. 1976-77 should have been approved as includible in the net wealth of the assessee by the AAC instead of deleting the same, on the clear authority of the Madras High Court in (T.V. Srinivasan vs. CWT (1985) 152 ITR 599 (Mad) and the Hon'ble Supreme Court decision in the case of CWT vs. K.S.N. Bhatt (1983) 37 CTR (SC) 273 : (1984) 145 ITR 1 (SC). Shri Devanathan, the learned counsel for the assessee contended that the refund order for the asst. yr. 1976-77 was passed after 31st March,1978 and so the AAC correctly deleted the addition of Rs. 11,305 following the Gujarat High Court decision in CW ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee on the valuation date, that on the valuation date what the assessee does, is to discharge his legal and statutory obligation of paying advance tax, which, if undischarged, will remain as a debt owed by him on the valuation date, and that, therefore, the payment of any advance tax cannot be treated as an asset of the assessee which belongs to him. With respect, we are not inclined to accept the reasoning of the learned judges of the Gujarat High Court." The Madras High Court held that the entire payment towards advance tax not towards discharge of an accrued liability. While giving reasons as to why the Gujarat High Court decision could not be accepted as correct. Their Lordship stated as follows at page 606:- "Though the statute provides for the payment of advance tax even before actual accrual of the income-tax liability the advance tax cannot be payment towards an accrued liability....... If payment of advance tax is take to be in discharge of a debt owed, then the accrued liability for income-tax as quantified by the final assessment will also be a debt owed and thus in respect of an income-tax liability of a particular year, there will be two debts owed to the Gove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tmental appeal. The assessee is an individual. The assessment year involved is 1979-80 for which the valuation date was 31st March. 1979. By the WT return dt. 5th April, 1980, the assessee returned a net wealth of Rs. 13,611. The WT return was revised on 4th Dec., 1980 by which a deficit wealth of Rs. 23,261 was returned. The assessment was completed under s. 16(3) by the assessment order dt. 22nd Feb., 1984 under which a net wealth of Rs. 3,66,800 was determined. In the assessment made, a sum of Rs. 31,130 towards IT refund due for 1977-78 and sum of Rs. 31,186 as IT refund due for the asst. yr. 1976-77 were added as part of the net wealth of the assessee. The total thus added towards IT refund was Rs. 62,316. Aggrieved against this addition, the assessee went in appeal before the AAC following the Gujarat High Court decision in CWT vs. Arvindbhai Chinubhai, he deleted the addition of Rs. 62,316 by stating that even assuming that the likelihood of obtaining refund of the amount may be an asset of the assessee, it is not capable of evaluation as on the valuation date and such an asset is not capable of being ascertained and cannot be treated as an assets for the purpose of arriving ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asst. yr.1976-77, restored the matter to the ITO for a decision afresh after considering the relevant judicial pronouncements on the point. The same decision would hold good this year also and as such the order of the Commissioner (A) on this point will stand modified and the matter will be restored to the Commissioner (A) for consideration afresh in the light of our findings in the order for the asst. yr.1976-77." In view of the above order of the Tribunal in this matter we will also set aside the order of the ACC on this point and restore it to his file once gain in order to dispose of the point having regard to the IT appeal before the CIT(A) for the asst. yr. 1976-77. In the result, the appeal of the Department is allowed on this point for statistical purposes. 5. CO No. 144/Mds/87 In the course of searches conducted in January, 1981 in the assessee premises, silver articles were found in the premises of the assessee at Kanadukathan., The assessee explanation for the source of the silver articles to the extent of 115.200 kg. was not accepted. In the course of the proceedings before the Assistant Director of Inspection, Madras, the assessee by letter dt. 15th Feb., 1982 st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s pride of possession and it is desirable that exemption should also be extended to such laurels of victory. Simply because the silver cups and trophies were not kept in an almirah for display, they should not be taken to be works of art is also not correct for nowhere in s. 5(1)(xii) it is stated that such a display of works of art should be made. Though the order of this Tribunal, A-Bench, dt. 21st June, 1985 passed in WTA No. 256/Mds/84 was not filed before us, the statement of the case referring two questions on this aspect to the Madras High Court which is dt. 6th Dec., 1985 is placed before is. In the said order, a gist of the Tribunal decision is recorded as follows: "The question to be considered, it found, was whether it could be regarded as works of art. Samples of the cups and trophies were also produced before the Tribunal and seen by it. The Tribunal found that many of these cups and trophies carry engraved markings of the occasion and events in which the cups or trophies were won and clearly, accordingly to the Tribunal, they are articles intended to be retained by the assessee as a pride of possession and not for resale, but it considered that the same cannot be br ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions and other articles intended for the personal or household use of the assessee, but not including jewellery: Provided that the furniture, utensils or other articles are neither made wholly or partly of, nor contain (whether by way of embedding, covering or otherwise, gold, silver, platinum any oath precious metal or any allow containing one or more of such precious metals." A fair reading of the above provision would disclose to us that silver utensils are not exempt from wealth-tax. Admittedly, from the facts of this case, it is found that though it is alleged that the assessee had obtained several silver trophies, they were not preserved as such but they were converted into basic metal which again was converted into silver utensils. Now the exemption sought for is with regard to the silver utensils and not in the shape of silver trophies themselves. This is an additional reason as to why the exemption sought for is to be denied. 6. WTA No. 1023/Mds/87: This is a departmental appeal for the asst. yr. 1980-81 for which the valuation date was 31st March, 1980. Three points are involved in this appeal by the Revenue. The first is with regard to the IT refunds due on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the worth of the company under r. 1D. The assessee valued the shares at Rs. 170 per share whereas the WTO without considering the proposed dividend as a liability, considered the share value at Rs. 192 per share under r.1D of the WT Rules and towards the difference between the share values, a sum of Rs. 16,500 was added by the WTO awhile making the assessment for the asst. yr. 1980-81 as per his assessment order dt. 28th Sept., 1984 passed under s. 16(3). Aggrieved against the said addition, the assessee appealed before the AAC. It was contended that while working out the value of shares under r. 1D, the proposed dividend of Rs. 5,43,450 should be allowed as a liability and if it is considered as a liability, there is no place for addition. This contention of the assessee was accepted purporting to follow his appellate order passed in the case of M.A. Chidambaram(HUF) for the asst. yr. 1980-81 and the AAC directed that the addition of Rs. 16,500 should be deleted. The stand taken by the first appellate authority is supported by the decision of the Supreme Court in Vazir Sultan Tobacco Co. Ltd vs. CIT (1981) 25 CTR (SC) 186: (1981) 32 ITR 559 (SC) and also the Madras High Court dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and has got to be deducted in ascertaining the net value of a company's assets for purposes of computing the market value of unquote shares." Hence as the impugned order passed by the AAC has adequate authority in the above two decisions, we feel that there are no valid grounds for the Revenue to attach the validity of the AAC's finding in this regard. We hold this ground as ill-conceived and hence we reject the same. In the result, the appeal is partly allowed. 9. CO No. 145/Mds/87: This Cross Objection relates to the asst. yr. 1980-81. The only ground taken in this C.O. is that the AAC in his impugned order wrongly denied the exemption under s. 5(1)(xii) to the assessee for the silver cups and trophies which were kept by him only as art collection or works of art and they must have been held as articles not intended for sale. The rate of silver as on 31st March, 1980 was found at Rs. 2,655 per kilogram and the increase in rate when compared to the rate in immediately preceding assessment year is found to be 57 per cent and so, as against the addition of Rs. 61,000 for the asst. yr. 1979-80, the addition for the asst. yr. 1980-81 was increased to Rs. 95,770 though the quant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... td. vs. CIT and the decision of the Madras High Court in CWT Ors. vs. S. Ram Ors. (1983) 37 CTR (Mad) 158 : (1984) 147 ITR 278 (Mad) and further this very question was also considered by the earlier D-Bench of this Tribunal in its orders dt. 9th Sept., 1986 passed in WTA Nos. 871 and 872/Mds/85 in the case of ITO vs. Smt. CT. Oppilal Achi, a copy of which is filed before us. We went through the said order and we found the earlier Tribunal having followed CWT Ors. vs. S. Ram Ors. as the basic of their decision. Hence we hold that there are no grounds to disturb the order of the AAC. Hence we dismiss the Revenue's ground. 14. C.O. No. 146/Mds/87: There are two grounds raised in this Cross Objection : (i) disallowance of debts claimed under s. 2(m)(ii)-Rs. 97,630, and (ii) inclusion of value of silver cups and trophies-Rs. 4,500. The assessee-HUF (specified) claimed that it was due in a sum of Rs. 5,93,823 as debts due in India. Out of this, a sum of Rs. 97,630 was claimed as amount payable to Shri A.C. Muthiah (Indl.) and this debt was admitted to have been incurred in relation to race horses. The WTO while making the assessment held that since race horses are exempted as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e we hold that the decision of the AAC on this question is unassailable inasmuch as it is quite in consonance with the Full Bench decision of the Madras High Court. In the result, we do not find any substance in this ground. Hence it is dismissed. 15. The second ground in this Cross Objection is about the inclusion of Rs. 4,500 towards the value of silver cups an trophies. During this year, the assessee won cups and trophies of the value of Rs. 4,500. He contended that they are works of art and/or art collections and hence their value should be held exempt under s. 5(1)(xii). The WTO did not agree and added their value to the wealth of the assessee. The AAC in appeal confirmed this addition. We have already thrashed out the same point in our earlier paragraphs and following the same, we hold that the addition cannot be held to be illegal and hence it is confirmed and this ground is dismissed. 16. WTA No. 1025/Mds/87: This is a departmental appeal relating to the asst. yr. 1981-82 for which the valuation date was 31st March, 1981. Two points are involved. The first point is with regard to IT refund due but not quantified as on the relevant valuation date. The question is wheth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with regard to the legality of adding a sum of Rs. 42,770 towards the amount of compulsory deposit made by the assessee. According to the assessee, the compulsory deposit amount being in the nature of annuity is not includible in the net wealth of the assessee. This point is squarely covered by the Bombay Special Bench decision of this Tribunal reported in Smt. Sushilaben A. Mafatlal vs. WTO (1986) 26 TTJ (Bom) 67 (SB) : (1986) 16 ITD 189 (Bom)(SB). Giving the reasons as to why the compulsory deposit should not be excluded from the wealth of the assessee, the Special Bench held the following as per the head note of the decision given at pages 190 and 191 : "An annuity cannot be related to a fixed proportion of capital. Thus, when the assessee received one-fifth of the amount deposited by him in each year for a period of five years, after the lapse of two years of deposit, it could not be treated as an annuity because it was related to a fixed proportion of capital. Further, in view of the decision in CWT vs. P.K. Banerjee (1980) 19 CTR (SC) 376 : (1980) 125 ITR 641 (SC), the claim that a deposit in the Compulsory Deposit Scheme was an annuity was totally misconceived and unsusta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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