9911796707
TMI Blog1984 (11) TMI 37X X X X Extracts X X X X X X X X Extracts X X X X ..... December 31, 1973, respectively. The assessment orders dated February 24, 1979, indicate that the returns of wealth-tax for all these years were filed on June 23, 1978. The Wealth-tax Officer disallowed the assessee's claim in respect of income-tax liabilities observing that the amounts claimed are not admissible in view of the provisions of section 2(m)(iii)(a) and (b) of the Wealth-tax Act, 1957, and that further the liability claimed was not an ascertained liability on the valuation dates. The assessee had claimed deductions pertaining to the income-tax liability as per details given below : ---------------------------------------------------------------------- Asstt. Wealth Dt. of I.T. finally Payments year. returned/ filing determined made wealth of I.T. assessed ret./Dt. of I.T. Asstt. order ---------------------------------------------------------------------- 1971-72 98,514 24-2-1975 30,043(inclusive of Nil. ------ --------- Rs. 14,524 for 1,31,830 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inst the assessee on the valuation dates relevant to assessment years 1971-72 to 1974-75 ? 2. Whether, on the facts and circumstances of the case, the Tribunal was justified in holding that the different assessment orders passed under the Income-tax Act were irrelevant and, therefore, of no consequence ? 3. Whether, on the facts and circumstances of the case, the Tribunal was correct in interpreting the word " outstanding " with reference to section 2(m)(iii)(a) of the W.T. Act and accordingly whether the disallowance of the tax liability on this ground was justified ? " However, the Tribunal thought it proper to refer to this court only one question as mentioned above. According to the learned counsel for the assessee, the question framed and referred to this court by the Tribunal requires reframing and accordingly by an application I.A. No. 5347 of 1984, dated November 7, 1984, the assessee has prayed that the question of law be modified as suggested by him as under : " Whether, on the facts and in the circumstances of the case, the applicant-assessee is entitled to deduction of income-tax assessed after the assessment years in question, for the purpose of computat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not liable to pay tax on the income derived from certain activities carried on by the trust because the trust is a charitable institution, and the contention of the Department is that this income is not exempt from tax. Therefore, what we have to consider is, looking to the provisions of the Income-tax Act, whether this income is or is not exempt from tax. It is not necessary for the assessee to suggest under what particular section of the Act the income is exempt. That is a matter of legal argument which can always be advanced in this court. Therefore, the proper question which the Tribunal should have framed and submitted to us was whether this particular income is exempt from taxation. It would be open to the Tribunal in the statement of the case to point out under which section in its opinion it is exempted. But we would not be bound necessarily to take the same view as the Tribunal. In order to uphold the exemption, it would be open to us if that question was raised to say that although we do not agree with the Tribunal that the income is exempt under the particular provision of the law on which the Tribunal has relied, it is still exempt from taxation under some other provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e concerned, but he submitted that even in a case where out of the questions proposed to be referred to this court only some are referred, even in respect of those questions which have not been referred by the Tribunal, the assessee is required to approach this court again, but the question cannot be reframed in the manner suggested by the assessee. It is not in dispute that under the Wealth-tax Act an assessee is liable to pay tax on his net wealth, which is defined in section 2(m) of the Wealth-tax Act, as under: " (m) `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 valuation date, including assets required to be included in his net wealth as on that date under this Act, is in excess of the aggregate value of all the debts owed by the assessee on the valuation date other than (i) debts which under section 6 are not to be taken into account; (ii) debts which are secured on, or which have been incurred in relation to, any property in respect of which wealth-tax is not chargeable under this Act; and (iii) the amount of the tax, penalty o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there is no dispute that the assessee is entitled to the deduction of income-tax as determined in order to find out the net wealth of the assessee and, therefore, it is a " debt owed ". It is no doubt true that the returns were filed by the assessee after the valuation date, but the time of accrual for the income-tax liability arose not on the valuation date, but the same was quantified at a later date. The learned counsel for the assessee, therefore, contended that the quantification of tax liability is altogether different from the existence of such liability and that 'outstanding' for twelve months should not be counted on the basis of assessment order, demand notice and that, in fact, such claims should be considered on the basis of existence of the liability after expiry of the relevant accounting period. He further submitted that though the liability might not have been quantified as well, the same was very much in existence and may be allowed which was finally quantified. In CWT v. Kantilal Manilal [1973] 88 ITR 125 (Guj), it has been held that (headnote) : "The liability to pay income-tax, gift-tax or wealth-tax is a 'debt' owed by the assessee on the relevant valuation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are finalised after the valuation date. The quantification effected by an assessment order may be varied as the income-tax, wealth-tax and gift-tax case is carried in appeal to the Appellate Assistant Commissioner, or thereafter to the Appellate Tribunal, and indeed even in reference later to the High Court or subsequent appeal to the Supreme Court. It is the quantification of the tax liability by the ultimate judicial authority which will determine the amount of the debt owed by the assessee on the valuation date. So long as such ultimate determination indicates the existence of a positive tax liability, there is debt owed by the assessee on the valuation date even though such determination may be subsequent, in point of time, to the valuation date. If, however, it is found on such ultimate determination that there is no tax liability, it cannot be said that, merely because originally a tax liability had been determined and stood existing on the valuation date, there was a debt owed by the assessee. If the finding is that there was no tax liability, it must be held that there was no debt owed by the assessee on the valuation date. " To the similar effect is the decision report ..... X X X X Extracts X X X X X X X X Extracts X X X X
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