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TMI Blog1978 (7) TMI 77X X X X Extracts X X X X X X X X Extracts X X X X ..... see was entitled to deduction of income-tax payable by him on the income disclosed under section 68 of the Finance Act, 1965 ? " The assessse in question, Shri Raj Paul Chawla, was a partner in the firm, M/s. Diwan Chand Chawla & Co., and the assessment years in question are the years 1960-61, 1961-62 and 1962-63. No return had been filed by the assessee originally, but subsequently he made a voluntary disclosure under s. 68 of the Finance Act, 1965, showing Rs. 87,000 as his undisclosed income; on that basis he became liable to pay tax amounting to Rs. 52,200 some time after March, 1965. After the settlement of the income-tax liability, proceedings regarding the wealth-tax were taken up and for the three years in question returns showing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wn his liability. But the position as far as the valuation dates were concerned was not changed, because the voluntary disclosure scheme of 1965 did not change the essential nature of the liability. It merely substituted a new liability for the assessee's original liability. It exonerated the assessee from penalty and gave him a concession in the matter of rates. But the liability was not different in its essential nature from the original liability imposed by the Income-tax Act. The Tribunal applied the decision of the Punjab High Court in CIT v. Vijay Kumar Behal [1971] 81 ITR 202 in preference to the decision of the Kerala High Court reported as C. K. Babu Naidu v. WTO [1971] 82 ITR 410. The question for decision posed to us is somewhat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n s. 2(m) of the W.T. Act, 1957. It reads 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 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 info 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 or interest payable in c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of a law even if there is no order. On a careful reading of the section, it appears that the section can be read in the manner contended for by learned counsel for the department. But, as it can also be read as meaning that an order of assessment is necessary before the liability arises, it is preferable in our view to read the section as applying only to the cases in which an order of assessment has been passed. For this matter, it is necessary to note that for the purpose of applying this provision, not only should the amount be payable but it should be either challenged in appeal, revision or other proceedings as not being payable or, alternatively, it should be outstanding for a period of more than twelve months on the valuation date. W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d becomes payable subsequently upon assessment and demand. It refers to a liability which is of the nature of a present debt, an amount which is payable in consequence of an order passed under or in pursuance of any of the enactments mentioned. It refers to the stage of ' payability '. The sense of section 2(m)(iii) is clearly apparent when its sub-clauses (a) and (b) are read with it. The construction which learned counsel for the Commissioner wishes us to place on section 2(m)(iii) cannot be accepted. " On the same reasoning, we are of the view that the tax amount was not payable within the meaning of s. 2(m)(iii) for the simple reason that no assessment order had been passed. It so happens that the order was passed some time in March, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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