1991 (2) TMI 4

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..... h of the firm in terms of rules 2 to 2E of the Wealth-tax Rules, 1957, in determining the value of interest of the assessee in the firm relating to the assessment year 1978-79 ? (2) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was correct in holding that, if the amount of provision for taxation was not reduced by the amount of advance tax paid, then the entire amount of Rs. 4,15,000 representing provision for taxation would have to be added to the value of the assets of the firm in determining the value of interest of the assessee in the firm ? " The facts are that the Wealth-tax Officer, in his assessment, valued the interest of the assessee in the partnership, Messrs. East Coast Agency, as per compu .....

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..... . Opposing this, the authorised representative for the assessee contended that the tax liability was not future or contingent liability and as such the tax provision made in the balance-sheet could not be ignored. He also drew our attention to the Explanation to rule 2E. He further contended that under clause (a) of rule 2D any amount paid as advance tax could not be adjusted against the tax provision made. We do not understand why the assessee takes objection to the adjustment of the advance tax paid against the amount of tax provision because this has been done to its advantage. If the amount of tax provision was not reduced by the amount of advance tax paid, then the entire amount of Rs. 4,15,000 as tax provision would have been added to .....

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..... section 4(1)(b) of the Wealth-tax Act, 1957, specifically lays down that the value of a share in the interest of a firm is to be determined in the prescribed manner and rule 2 of the Wealth-tax Rules, 1957, prescribes such manner. Section 7(2) of the Act and rules 2A to 2G of the Rules cannot be extended to cover cases specifically governed by section 4(1)(b) of the Wealth-tax Act and rule 2. Hence, in determining the value of the interest of an assessee in a firm, the provisions of sections 4(1)(b) and 7(1) read with rule 2 are applicable. In our view, the matter has to be remanded to the Tribunal for disposal afresh in accordance with the principle laid down by this court in that decision. We, therefore, decline to answer this question a .....

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