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TMI Blog1973 (6) TMI 14X X X X Extracts X X X X X X X X Extracts X X X X ..... axed. According to them, the income-tax due on the income declared according to the provisions in section 68 of the Finance Act, 1965, must be deducted from the income declared and the net wealth arrived at. The contention is based on the definition of " net wealth " in section 2(m) of the Wealth-tax Act, 1957, which is in these terms : " ' 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--...... ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1971. Consequent on the declaration under section 68 of the Finance Act, 1965, and the assessment to income-tax steps were taken under section 17 of the Wealth-tax Act, 1957, to reopen the. wealth-tax assessments and what has been done is to add to the net wealth of the assessees for each of the years what we have mentioned, the entirety, of the income declared for that year under section 68 of the Finance Act, 1965. Counsel for the assessee has repeated the argument that was advanced by him before the learned single judge that the procedure adopted is not justified by the principles that are applicable to the case. There is no dispute that the valuation date for the four years with which we are concerned are March 31, 1962, March 31, 196 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act, 1965, chair only arise at the time of the declaration and not on the valuation dates. With great respect, we are unable to agree with this view. The liability for tax arising out of the declaration under section 68 of the Finance Act, 1965, is nothing other that the liability under the Income-tax Act, 1961, which was the Act that was applicable. It is the charging section, section 4 of that Act, which has imposed the liability. This is so, notwithstanding the fact that enabling provisions have been made in the Finance Act, 1965, by permitting the assessees, if so minded, to make a declaration under section 68(2) of the Finance Act, 1965, and providing that the amount so declared will be taken as the income of the assessee. A further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f May, 1965, pays such amount as is not less than one-half of the amount of income-tax as computed at the said rate or furnishes adequate security for the payment thereof in accordance with sub-section (4), and in either case assigns any shares in or debentures of, a joint stock company or mortgages any immovable property, in favour of the President of India by way of security for the payment of the balance, and undertakes to pay such balance within the period referred to in clause (ii). (2) The declaration shall be made to the Commissioner, and shall specify the period required to be specified under clause (ii) of sub-section (1), contain the name, address and signature of the person making the declaration and also full information in re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by section 4 of the Income-tax Act, 1961, that the Finance Act, 1965, shall declare the rates applicable. Neither of these things can alter the liability, a liability that arises and stems from the existence of the Income-tax Act containing the charging section, section 4. We have no doubt that the liability is a liability that arose on the valuation date (vide the Supreme Court decision in H. H. Sethu Parvati Bayi v. Commissioner of Wealth-tax [1968] 69 ITR 864) and that that liability was a debt owed by the assessees on the valuation dates falling under section 2(m) of the Wealth-tax Act, 1957. The Wealth-tax Officer was, therefore, in error in not having deducted the income-tax liability on the various valuation dates for the four yea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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