9911796707
TMI Blog1978 (9) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... an individual. The assessment year in question is 1965-66, for which the relevant valuation date is November 4, 1964. The said sum of Rs. 15,20,000 is a portion of the total assets voluntarily disclosed by the assessee under s. 68 of the Finance Act, 1965. The disclosure was made on May 31,1965, that is, later than the said valuation date. The break-up of the total assets disclosed was as under: Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; --------- The assessee paid income-tax on the voluntarily disclosed income in terms of s. 68 of the said Finance Act. Consequent upon the said voluntary disclosure, proceedings under s. 17(1)(a) of the W.T. Act, 1957 (hereinafter referred to as " the Act ") were initiated for the assessment year 1965-66. The assessee returned his net wealth at Rs. 5,27,132, that is to say, the net wealth as had been assessed in his original assessment. When the WTO wanted to assess the asset disclosed under s. 68 of the Finance Act, the assessee submitted that no part of the value of the said asset could be included in his net wealth for the assessment year in question, because the disclos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mentioned above. Mr. Rajgarhia, appearing for the department, advanced arguments on the lines as have been accepted by the Gujarat High Court in the case of CWT v. Ahmed Ibrahim Sahigara [1974] 93 ITR 288. The point involved in the reference before the Gujarat High Court was, whether in the computation of net wealth, the assessee was entitled to a deduction of the amount of tax paid under s. 68 of the Finance Act, 1965, as a "debt owed by him on the relevant valuation date. It will immediately be noticed that the Gujarat High Court was seized with a question which was different in nature from the question which has been referred to us in the instant case. The deduction of the amount of tax which has been allowed as per the Tribunal's ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e taxed to wealth-tax which is left in the assessee's hands after deducting the debts owed on it. The Supreme Court, in the case of Kesoram Industries and Cotton Mills Ltd. v. CWT [1966] 59 ITR 767, has explained that the expression " debt owed " occurring in s. 2(m) of the Act includes income-tax liability on the asset. It has been observed thus (p. 784): " A debt is a present obligation to pay an ascertainable sum of money... A liability to pay income-tax is a present liability though it becomes payable after it is quantified in accordance with ascertainable data. There is a perfected debt at any rate on the last day of the accounting year and not a contingent liability. The rate is always easily ascertainable. " Now, the simple questi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation date, the assets were held under a liability to pay income-tax on them. It then follows as natural corollary that there is a perfected debt on the valuation date (which would be the last date of the accounting year for the assessment year 1965-66) in the shape of income-tax payable on the said assets, against the assessee. The Department, having included the value of the said assets i n the assessee's total wealth as on the relevant valuation date, cannot turn back and say that it would not deduct the debt owed on it, because the actual date of its acquisition was unascertainable. The department cannot be permitted to take contradictory positions. The question must, therefore, be answered in the affirmative and against the Department ..... X X X X Extracts X X X X X X X X Extracts X X X X
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