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TMI Blog2002 (8) TMI 100X X X X Extracts X X X X X X X X Extracts X X X X ..... ted:- 12-8-2002 - Judge(s) : V. S. SIRPURKAR., N. V. BALASUBRAMANIAN. JUDGMENT The judgment of the court was delivered by N. V. BALASUBRAMANIAN J.-This is a reference under the Estate Duty Act, 1953. One K. Periaswamy died on August 28, 1975. At the time of his death, he was a partner in a firm styled Amarjothi Fabrics. Subsequent to the date of death of K. Periaswamy, the other partners of the firm disclosed under the Voluntary Disclosure of Income and Wealth Act, 1976, the stock valued at Rs. 2,97,000 and also paid tax on the said amount. The stocks so declared represented the concealed income of the firm and the proportionate tax liability of K. Periaswamy was deducted from his share of the income disclosed under the Voluntary Disclosure Scheme and necessary entries were also made in the account books of the firm. The accountable person in the estate duty proceedings of K. Periaswamy claimed that the proportionate amount of tax paid by the firm under the Voluntary Disclosure Scheme in relation to K. Periaswamy's share should also be taken into account in determining the principal value of the estate of the deceased. The Assistant Controller rejected the claim of the ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s court held that the provision for marriage expenses of unmarried daughters is not deductible under the Estate Duty Act. We have carefully considered the submissions of learned counsel for the parties. The chargeable event in the Estate Duty Act is the death of a person and the charge is on the properties passing on the death of the person. Part VI of the Estate Duty Act deals with the deductions in determining the principal value of the estate and section 44 of the said Act deals with the deduction of "debts and encumbrances", There is no dispute that if the debt was a subsisting debt on the date of death of the deceased, it is deductible. The decisions relied upon by learned senior standing counsel for the Revenue, reported in P. Leelavathamma v. CED [1991] 188 ITR 803 (SC) and Nawab Mir Barkat Ali Khan Bahadur v. CED [1996] 222 ITR 612 (SC) dealt with the deductibility of estate duty paid in determining the principal value of the estate either under section 36 or 44 of the Act. The Supreme Court held that the amount of estate duty paid is not liable to be taken into account in determining the principal value of the estate either under section 36 of the Act, nor deductible un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... form of stocks and the proportionate value of stocks was taken into account for the purpose of levy of estate duty. We are of the opinion that once the declaration was accepted, it meant that the Department has accepted the position that the income was earned during the previous years during the period in which that income was earned, but was omitted to be returned. Consequently, the liability to tax on the concealed income would arise at the end of the previous years in question in which the income accrued as the declaration itself was made in recognition of the pre-existing liability. We are of the opinion that no new liability is created under the Voluntary Disclosure Act but the income which accrued and the statutory liability that arose under the Income-tax Act was declared under the provisions of the Voluntary Disclosure Act. In CWT v. Bhatt (K. S. N.) [1984] 145 ITR 1 (SC); CWT v. Vadilal Lallubhai [1984] 145 ITR 7 (SC) and CWT v. Vimlaben Vadilal Mehta [1984] 145 ITR 11, the Supreme Court has taken a view that the income tax liability crystallises on the last day of the previous year relevant to the assessment year and it was a liability in praesenti on the last date of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xed rate of income tax in respect of all the incomes disclosed without allowing deductions, exemptions and set-offs under the relevant income-tax law. Yet its function was no more than that of a Finance Act passed annually even though it made certain alterations with regard to filing of declaration and computation of taxable income. That the declaration was dependent upon the volition of the declarant and that the liability to tax on the amount mentioned therein was contingent upon the willingness of the declarant to disclose the amount make no difference. Any such voluntary disclosure by an assessee, even in the absence of section 68, would have exposed him to an assessment or reassessment, as the case may be, being made in respect of the sum disclosed as part of the income of the relevant assessment year and with the additional liability to payment of interest and levy of penalty and perhaps with the right to claim deductions, if any, admissible in the circumstances of the case and the benefit of other procedural rights. The voluntary character of the declaration cannot, therefore, alter the character of the tax." The Supreme Court in CWT v. Sheo Kumar Gupta [1993] 201 ITR 324 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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