9911796707
TMI Blog1998 (2) TMI 106X X X X Extracts X X X X X X X X Extracts X X X X ..... ulsory Deposit Scheme (Income-tax Payers') Act, 1974, is an 'asset' within the meaning of s. 2(e)(2)(ii) of the WT Act, 1957?" 2. All the references relate to the asst. yr. 1981 -82 corresponding to the valuation date 31st March, 1981. The first question involved is as to whether the amounts paid by the assessees as additional demands on completion of assessment under the IT Act, 1961, the WT Act and the GT Act and a part of it becoming due for refund to them in pursuance of the appellate orders passed after the relevant valuation date, constituted an asset within the meaning of s. 2(e) and thus formed part of the assessee's net wealth within the meaning of s. 2(m) of the Act on the relevant valuation date. 3. During the course of the assessment proceedings for the relevant assessment year, the WTO was of the opinion that even though these deposits have been made in pursuance of demands raised by the Revenue, yet these demands were not final and were liable to be varied by the appellate authorities. Relying on the judgment of the Supreme Court in the case of CWT vs. K.S.N. Bhatt (1983) 37 CTR (SC) 273 : (1984) 145 ITR 1 (SC) : TC 64R.739, wherein it was held that, in computing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceases to be an asset "belonging to the assessee" within the meaning of s. 2(m) of the Act and, therefore, cannot be included in his net wealth. His submission is that the expression "belonging to the assessee" postulates a legal domain of an assessee over the asset as explained by the Supreme Court in Late Nawab Sir Mir Osman Ali Khan vs. CWT (1986) 57 CTR (SC) 89 : (1986) 162 ITR 888 (SC) : TC 64R.558. Learned counsel has also invited our attention to a decision of the Gujarat High Court in CWT vs. Arvindbhai Chinubhai (1981) 24 CTR (Guj) 228 : (1982) 133 ITR 800 (Guj) : TC 63R.439 and of the Rajasthan High Court in CIT vs. Rangnath Bangur (1984) 41 CTR (Raj) 268 : (1985) 152 ITR 71 (Raj) : TC 64R.747, holding that on the mere possibility of getting income-tax refund in future, of the excess advance tax paid, on finalisation of the assessment proceedings, it would not form part of the asset of the assessee on the valuation date. 7. On the other hand, Mr. B. Gupta and Mr. R.D. Jolly, learned senior standing counsel for the Revenue, while supporting the view taken by the Tribunal have contended that the subsequent event of the assessee getting relief in appeals and thus becoming ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sidered as debt owed within the meaning of s. 2(m) came up for consideration in Kesoram Industries & Cotton Mills Ltd. vs. CWT (1966) 59 ITR 767 (SC) : TC 63R.177. The Supreme Court held that the phrase "debt owed" could be defined as a liability to pay "in praesenti" or "in futuro" an ascertainable sum of money; that the charging section for the purposes of income-tax was s. 3 of the Indian IT Act, 1922, and the annual Finance Acts only gave the rate for quantifying the tax; that a liability to pay income-tax was a present liability though the tax became payable after it was quantified in accordance with the ascertainable data. It was observed that there was a perfected debt at any rate on the last day of the accounting year and not a contingent liability, the rate was always easily ascertainable. If the Finance Act was passed, it was the rate fixed by that Act; if the Finance Act was not yet passed it was the rate proposed in Finance Bill pending before Parliament or the rate in force in the preceding year, whichever was more favourable to the assessee. If all the ingredients of "debt" were present, it was a present liability of an ascertainable amount. In that light, it was held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation date, which can be treated as an asset. Mere actionable claims or a right contingent upon the occurrence of a subsequent event cannot be treated as an asset. Therefore, a mere chance of getting relief in appeals and the resultant refund in future, in our view, cannot be treated as forming part of an asset of the assessee belonging to him for the purpose of determining his net wealth on the relevant valuation date. 13. In K.S.N. Bhatt's case (supra), relied upon by the Tribunal, the Supreme Court introduced the theory of relating back to a limited extent in so far as it related to the question of deduction of statutory liability from the net wealth under the Act. According to this decision, if there is a variation in the liability consequent upon the appellate or revisionary order or as a result of reference to the High Court or appeal to the Supreme Court, the liability as finally determined should be taken into consideration as on the valuation date to which it related, even though variation has taken place in a subsequent year. The relevant assessment has to be rectified giving effect to any of these orders. The said judgment basically deals with the quantification of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
