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TMI Blog1995 (11) TMI 28X X X X Extracts X X X X X X X X Extracts X X X X ..... han Mohd. Hanif and consequently including in the net wealth of the assessee his proportionate entitlement in the said alleged reserves ? (2) Whether the Tribunal did not err in not allowing the proportionate sum of Rs. 8,79,688 in the case of Mohd. Hanif, Rs. 6,59,766 in the case of Mohd. Imran, Rs. 7,33,073 in the case of Mohd. Aziz, Rs. 6,59,766 in the case of Mohd. Wasim, Rs. 5,13,151 in the case of Mohd. Sabir, Rs. 5,13,151 in the case of Shri Mohd. Ayaz, and Rs. 5,13,151 in the case of Shri Mohd. Ayar, standing to the credit of the Minimum Wages Amanat account ; Bonus Amanat account and Bidi and Cigar Amanat account as 'debt owed' by the firm, Kale Khan Mohd. Hanif, while computing the assessable wealth of the assessee-partner ? " The relevant period is the assessment year 1976-77, for which these seven references applications have been filed. It is pointed out that identical issues arose in the case of the partners of Kale Khan Mohd. Hanif for the assessment year 1977-78 and reference in those cases has also been made by the Tribunal before this court, which is covered under the aforesaid questions. The assessee/applicants are partners of the firm, Kale Khan Mohd. Hanif, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e kept the amount to the tune of Rs. 70,85,990 on account of payment of bonus amount as well as a provision for payment under the Bidi and Cigar Act. But no worker or person concerned claimed any share or portion on account of any such provision and the amount was never paid to the workers. It was found that ultimately, some of the reserves which were kept for payment of the bonus amount as well as for payment under the Bidi and Cigar Act to the workers, was utilised by the firm in business. Therefore, the assessee's share in this provision was taxed accordingly and the tax liability under the Wealth-tax Act was worked out and no rebate of this debt owed under section 2(m)(iii) of the Wealth-tax Act was given. The assessee-firm filed an appeal before the Tribunal and the Tribunal upheld the order of the assessing authority. Hence, the assessee-firm moved the Tribunal for making reference of the aforesaid questions and the Tribunal had accordingly referred both the aforesaid questions for answer by this court. The Tribunal did not dispute the legal position and held that so far as the liability under these Acts, i.e., the Bidi and Cigar Act and the Bonus Act, is concerned, the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s debt is owed by the assessee, no material was placed nor was pointed out the name of any person whose the debt is due by the assessee nor any step was taken by the assessee for these long years to discharge this liability. Simply, from time to time, the assessee created this amount under the so-called mercantile practice of accountancy for keeping this amount reserved for payment of statutory liability under the Bidi and Cigar Act or under the Bonus Act. But the assessee failed to satisfy the assessing authority how this amount is due to which worker. From these facts, it appears that this amount has piled up for long years and the assessee has been enjoying the corpus in his own business. This only indicates that, in fact, the assessee created this ghost and enjoyed the corpus and succeeded before the authority under the Income-tax Act that the assessee is entitled to rebate under section 36(1)(ii) of the Income-tax Act of this debt. But when the matter came before the wealth-tax authority, the assessee only contended on the basis of the assessment orders of the income-tax authorities and claimed a rebate of this amount also as a debt owed by the assessee on the valuation date. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . " Therefore, it is open for the authorities to make a factual enquiry to find out that whether this debt was really owed by the assessee or not under the aforesaid enactments, i.e., Bidi and Cigar Act and the Bonus Act. But the assessee has failed to satisfy the authorities about the bona fides of these debts being due or owed by the assessee ; therefore, the wealth-tax authorities have rightly recorded their finding. So far as the legal proposition is concerned, there is consensus opinion of the High Courts that the assessee is entitled to such rebate of debts due from net wealth. In this connection, a reference has been made to CIT v. Sugauli Sugar Works P. Ltd. [1983] 140 ITR 286 (Cal) ; CWT v. Raipur Manufacturing Co. Ltd. [1964] 52 ITR 482 (Guj) ; CWT v. Harrison and Crossfield Ltd. [1964] 54 ITR 587 (Ker) ; Kesoram Industries and Cotton Mills Ltd. v. CWT [1966] 59 ITR 767 (SC) ; CWT v. Prema Laxman [1984] 150 ITR 170 (Ker) and CIT v. Sadul Textiles Ltd. [1987] 167 ITR 634 (Raj). Shri V. K. Tankha, learned counsel appearing for the Revenue, has submitted that so far as the legal proposition is concerned, there are no two opinions that if any debt is owed by the assessee u ..... X X X X Extracts X X X X X X X X Extracts X X X X
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