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TMI Blog1987 (10) TMI 44X X X X Extracts X X X X X X X X Extracts X X X X ..... date, i.e., on March 25, 1975, but encashed after the valuation date, was an asset includible in the net wealth of the assessee for the assessment year 1974-75 ? 2. If the answer to the first question is in the affirmative, whether the Income-tax Appellate Tribunal was right in holding that the gross dividend and not the net dividend, i.e., interim dividend declared less tax deducted at source, is to be included as the value of the asset in the net wealth of the assessee for the assessment year 1975-76 ?" The assessee held shares in M/s. Nirlon Synthetic Fibres Chemicals Ltd., Bombay. In the accounting year relevant to the assessment year 1974-75, the company declared in respect of the assessee dividend in the sum of Rs. 1,50,255 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e net wealth under section 2(m) of the Wealth-tax Act. Counsel lays much stress on the principle laid down by the Supreme Court in CWT v. Kantilal Manilal [1985] 152 ITR 447, 452, where it, was held that only after a demand for payment of tax had been made, would section 2(m)(iii)(a) come into play. The decisions cited by counsel for the Revenue deal with the question whether money payable as tax, but not yet paid, is a " debt owed by the assessee " for the purpose of computing the net wealth under section 2(m) of the Wealth-tax Act. None of the decisions cited at the bar, however, deals with the question whether the money actually paid as tax was liable to be treated as part of the net wealth of the assessee during the relevant year. Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4D and section 195 shall, for the purpose of computing the income of an assessee be deemed to be income received. " Although the liability to pay income-tax is in substantive law squarely on the assessee himself, the machinery for collection is so devised as to place that liability for the purpose of collection and recovery upon the principal officer of the company paying the dividend, just as in the case of an employer who pays salary. Nevertheless, deduction at source is only one mode of recovery and it is without prejudice to any other mode of recovery (section 202 of the Income-tax Act). The principal officer of a company who fails to deduct tax at source or who fails to pay the tax after deducting the same, as required under section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax due thereon when the tax was deducted at source by the principal officer of the company. Notionally, therefore, with the declaration of the dividend and the deduction of income-tax at source, the assessee simultaneously received the entirety of the dividend and paid the income-tax thereon in accordance with the applicable rate. In the light of this principle, we shall now consider the matter in issue with reference to the relevant provision of the Wealth-tax Act. Section 2(m) of this Act, in so far as it is material, defines " net wealth as follows : " 'net wealth' means the amount by which the aggregate value computed in accordance with the provisions of this Act of all the assets, wherever located, belonging to the assessee on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on or command of the amount paid and that amount is no longer part of his assets. It represents neither his assets nor his debts. In computing the net wealth, therefore, there is no question of either including or deducting any amount which has been already paid as tax. That amount is no longer relevant in the computation of net wealth. It is no longer available to be included. The amount which has been deducted and retained by the company, whether or not it has been actually paid over to the Revenue-(in the present case, it has admittedly been paid to the Revenue)-is an amount which is no longer in the possession of the assessee, although, as seen above, it had been but notionally and simultaneously received as income and paid as income-ta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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