9911796707
TMI Blog1998 (6) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee is a shareholder in Southern Roadways Limited and that company had been assessed to tax in a sum of Rs. 48,15,668. The company's claim that it was not liable under sections 41(2) and 45 of the Income-tax Act, 1961, was rejected by the assessing authority. The claim had been rejected under those provisions by the Income-tax Officer on the ground that the compensation received by the company for loss of route permits was assessable to tax. These route permits were lost to the company by reason of the take over by the Government of Tamil Nadu with effect from January 17, 1972, of the routes on which the company was running buses. The take over was effected under the Tamil Nadu Fleet Operators Stage Carriages (Acquisition) Act, 1971. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee. The order of the Tribunal upholding the assessment to tax under sections 41(2) and 45 of the Act, it is submitted by counsel at the Bar, has been upheld by this court in T. C. No. 635 of 1983---Southern Roadways Ltd. v. CIT [1999] 235 ITR 21 (Mad)---decided on April 19, 1996. The reference before us arises out of the assessment of the respondent to wealth-tax for the year 1980-81 and the question is as to whether the tax liability of Rs. 48,15,668 is to be deducted from the total assets for the purpose of determining the break-up value of the shares of Southern Roadways Private Limited under rule 1D of the Wealth-tax Rules, 1957. The Income-tax Officer and the Appellate Assistant Commissioner held that the amount is not ded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity or otherwise of any sum for determining the break-up value of the shares. Counsel placed reliance on the decision of the Calcutta High Court in the case of CWT v. Mohan Lal Nopany [1970] 78 ITR 435, which was rendered by that court on September 22, 1969. The court therein held that the breakup value of the shares to a considerable extent was dependent upon the value which a potential buyer of the shares would place on the company's shares having regard to the financial data disclosed in the balance-sheet and such a potential buyer was not likely to value the shares at a lesser figure only because an appeal was pending before the statutory authorities under the Agricultural Income-tax Act in which the correctness or otherwise of an asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not cease to be a liability because the assessee had taken proceedings before higher authorities for getting it reduced or wiped out so long as the contention of the assessee did not prevail. It was also held that the fact that the assessee had failed to debit the liability in its books of account did not debar it from claiming the sum as a deduction either under section 10(1) or under section 10(2)(xv). The court has also observed that whether the assessee is entitled to a particular deduction or not will depend on the provision of law relating thereto and not on the view which the assessee might take of his rights. The case of CWT v. K. S. N. Bhatt [1984] 145 ITR 1 (SC), arose under the Wealth-tax Act. The question considered by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bility had been determined and stood existing on the valuation date there was a debt owed by the assessee." It is not in dispute that the company had been assessed to tax in the sum of Rs. 48,15,668. That amount had been quantified by the Assessing Officer. The Tribunal had upheld the assessment and that decision of the Tribunal has been affirmed by this court. The decision of the Tribunal relates back to the valuation date as does the decision of the High Court on the reference. It is only if and when the Supreme Court reverses the decision of this court on the assessee's appeal that the assessee can be said to have no liability for the payment of the sum of Rs. 48,15,668. As things stand now that sum is a liability which the company has ..... X X X X Extracts X X X X X X X X Extracts X X X X
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