9911796707
TMI Blog1978 (9) TMI 52X X X X Extracts X X X X X X X X Extracts X X X X ..... for opinion of this court are: "1. In the facts and circumstances of the case, whether the tax paid under s. 68 of the Finance Act, 1965, has been properly held to be income-tax payable under the Income-tax and Finance Acts. 2. If the answer be in the affirmative, then, whether the Tribunal was correct in holding that the principle of Kesoram Cotton Mills' case [1966] 59 ITR 767 (SC) applied. 3. If the answer to question No. 2 be in the affirmative, then, whether it can be said that there was a deductible liability on the respective valuation dates even though the liability itself was determined much later. Learned standing counsel for the department has, however, urged that the questions framed by the Tribunal do not bring out th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted in computing their net wealth. According to the assessee, he was entitled to such deduction in terms of s. 2(m) of the W.T. Act which defined the "net wealth" as being such amount as was ascertained after deducting the debts owed from the gross wealth. The claim of the assessee was, however, rejected by the WTO as also on appeal by the AAC. While dealing with the assessee's claim for deduction the AAC observed that since the liability to pay tax in terms of s. 68(3) of the Finance Act, 1965, arose much later than the relevant valuation dates, such liability would not come within the ambit of s. 2(m) of the W.T. Act. On further appeal to the Tribunal the assessee's claim that he was entitled to the deduction of the tax liability on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re, did not bring out the real controversy in dispute. According to the learned counsel for the department the real controversy was, to put in his own words: "Whether the tax imposed on the firm under section 68(3) of the Finance Act, 1965, was deductible as a debt owed in terms of section 2(m) of the Wealth-tax Act in computing the net wealth of the petitioner-assessee ?" Normally, this court is required to give its opinion on the question as framed and referred to it by the Tribunal unless of course the question referred did not require to be answered either by reason of the fact that it was merely academic in nature or by reason of the fact that it did not arise out of the Tribunal's order. In some cases, however, the question referr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has also been paid by it, nobody else except the firm can claim the benefit of deduction of the tax liability. The firm in such an assessment is treated as an unregistered firm and is assessed as such under the provisions of s. 68 of the Finance Act, 1965. Such being the position, it was submitted that if any part of the said income of the firm was tagged on to the partners' wealth, if at all, the liability for the tax could not be claimed by the partners. I think, neither of the two contentions have any merit. Regarding the first contention I need only say that a decision on it will necessarily lead me into deciding whether the tax liability which has to be treated as a debt owed was the one which arose under sub-s. (3) of sec. 68 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the tax liability on such addition as a debt owed on the relevant valuation dates. The deductibility of the tax liability as a debt owed within the meaning of s. 2(m) of the Act is clearly enunciated in the decision of the Supreme Court in the case of Kesoram Industries and Cotton Mills Ltd. [1966] 59 ITR 767. The second contention must also be, therefore, rejected. Several decisions of various High Courts were cited, some of which have taken the view that the tax liability would be the one as had been determined in terms of s. 68(3) of the Finance Act, 1965. Since we express no opinion on the question relating to the yardstick which has to be applied for determining the amount of tax liability, it is not necessary to refer to these de ..... X X X X Extracts X X X X X X X X Extracts X X X X
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