9911796707
TMI Blog1990 (6) TMI 32X X X X Extracts X X X X X X X X Extracts X X X X ..... the following amounts should be deducted as tax liability in computing the net wealth on the various valuation dates. Assessment year Valuation date Amount of tax Rs. 1967-68 31-3-1967 87,622 1968-69 to 31st March of the relevant 1,12,744 1972-73 accounting year for each year The amounts represented the income-tax liabilities of the assessee for the assessment years under consideration. The assessee was a partner in a firm at Calcutta the income from which was assessable to tax and for which the liabilities remained undisputed. Returns had been filed and the assessments completed and subjected to a revision at a later stage. By the time of filing returns of wealth for the years under consideration, the income-tax liabilities had been ascertained, but had remained unpaid. The assessee had claimed deduction under section 2(m) of the Wealth-tax Act which the Wealth-tax Officer refused to entertain on the ground that section 2(m)(iii) of the Wealth-tax Act provides that those taxes which are in dispute or remain unpaid for more than one year after the demand was raised are not eligible for deduction under the said section. The Wealth-tax Office pointed out that the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmitted that the assessee is not entitled to the deduction as claimed by him. However, learned counsel for the assessee, by way of reply, contended that the words "in pursuance of this Act", should also govern the previous words. "any order passed". The order passed would be in pursuance of the Income-tax Act and in this case no such order was passed. Learned counsel further submitted that any amount payable under section 220 may come under this situation. Learned counsel appearing for the assessee as well as learned standing counsel appearing for the Department cited several decisions in order to support their respective contentions. We have heard the rival submissions. The point for consideration in this reference is whether the assessee is entitled to deduction, under section 2(m) of the Wealth-tax Act as debt owed, of the self-assessment tax payable under section 140A of the Income-tax Act, 1961, even if it remained outstanding for a period of more than one year on the valuation date. The fact remains that the assessee is liable to pay self-assessment tax under section 140A of the Income-tax Act, 1961, for the assessment years under consideration. Income-tax returns wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat in the case of CWT v. Standard Vacuum Oil Co. Ltd. [1966] 59 ITR 569, wherein the Supreme Court held as under (headnote) : "There is no substantial difference between the advance tax paid under the provisions of section 18A and tax due and paid under a demand notice passed after an assessment, the only difference being that, if the facts so warrant, the assessee is enabled to pay less than the amount demanded by the Income-tax Officer. But till a new estimate is made by the assessee, the amount is ascertained and, there is a statutory liability on the assessee to pay the amount mentioned in the order under section 18A. A condition subsequent, the fulfilment of which may result in the reduction or even extinction of liability, would not have the effect of converting the liability which attaches under a notice under section 18A into a contingent liability. A debt is owed when an order under section 18A(1) is passed and a notice of demand sent. The amount mentioned in the notice is owed till new figure is substituted by the action of the assessee." Another decision relied on by learned counsel for the assessee was that in the case of Kesoram Industries and Cotton Mills Ltd. v. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l for the assessee was that in the case of Maharaj Kumar Kamal Singh v. CWT [1972] 84 ITR 240 (Patna) [FB], wherein it was held as under (headnote) : "The expression 'any law relating to taxation of income or profits' in section 2(m) of the Wealth-tax Act includes the Bihar Agricultural Income-tax Act. Therefore, amounts of agricultural income-tax which are outstanding from the assessee for a period of more than twelve months as on the valuation date are not deductible as a debt owed by the assessee in computing his net wealth. But the agricultural income-tax remaining unpaid for more than twelve months has to be taken into consideration under section 4(c) of the Bihar Land Reforms Act in determining the value of the ad interim compensation receivable under that Act." In all these decisions clause(iii) of section 2(m) was not the subject matter in issue. Therefore, these decisions will not render any assistance in deciding the issue arising in the present case. However, learned standing counsel appearing for the Department, relied upon a decision in the case of CWT v. J. K. Cotton Manufacturers Ltd. [1984] 146 ITR 552, 561, wherein the Supreme Court held as under: "Sub-clau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iability to pay in futuro an ascertainable sum of money. Both kinds of liabilities are included within the expression 'debt owed'. But when we refer to the clause under consideration, it narrows down the scope to a liability which exists in the present time. That is so because the clause speaks of tax outstanding in consequence of an order passed under the relevant taxing statute. As discussed earlier, tax becomes payable in consequence of such order when a notice of demand is served on the assessee." Another decision relied on by learned standing counsel was that in the case of Swadeshi Cotton Mills Ltd. v. CWT [1971] 81 ITR 482, 485, wherein the Allahabad High Court held as under: "In the next place, it is clear, on a plain reading of the statute, that only such amount of tax, penalty or interest is liable to be excluded from the aggregate value of the 'debts owed' by the assessee on the valuation date as is payable in consequence of an order passed under or in pursuance of the enactments mentioned in section 2(m)(iii) and is outstanding for a period of more than twelve months on the valuation date. Section 2(m)(iii) trates of an amount which is 'payable'. It does not contemp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld be issued in respect of the liability under section 140A as section 156 requires that the tax shall be payable 'in consequence of any order passed under the Act' before any notice of demand could be issued under that section. Section 140A speaks of self-assessment and no order is made by any assessing authority under that section., The consequences of non-applicability of section 156 may result in the non-applicability of the tax recovery provisions under sections 220 and 221 of the Act. But section 232 saves the right of the Government to recover the same under the provisions of any other law for the time being in force relating to the recovery of debts due to the Government or the right of the Government to institute a suit for recovery of arrears due from the assessee. Thus, the tax payable under section 140A(1), if not voluntarily paid, is recoverable as any other debt due to the Government." We have carefully considered all the decisions cited before us. The fact remains that in the present case, the self-assessment tax payable under section 140A remained as an outstanding for a period of more than one year. Tax under section 140A is payable not because of an order passed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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