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TMI Blog1976 (1) TMI 24X X X X Extracts X X X X X X X X Extracts X X X X ..... (deceased) for the assessment years 1961-62, 1962-63 and 1963-64 were legally made ? " Mr. B. L. Pal, the learned counsel for the revenue, has confined his submissions solely to the assessment year 1961-62 by conceding that the executors cannot be assessed to wealth-tax in the assessment years 1962-63 and 1963-64, in view of the decision of the Bombay High Court in the case of Jamnadas v. Commissioner of Wealth-tax [1965] 56 ITR 648 (Bom). He, however, placed reliance on the said decision in support of his contention that the assets left by Sir Edward in the year of his death was taxable in the hands of the executors. His further submission is that though no return was filed by Sir Edward prior to his death, his executors are liable to be taxed under section 19(2) of the Act. His final submission is that section 19A of the Act is retrospective in its operation and, therefore, the net wealth of the deceased is liable to be taxed in the hands of the executors under this section. We are, however, not impressed by his submissions. Section 3 of the Act provides as follows : " Subject to the other provisions contained in this Act, there shall be charged for every assessment year c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e corresponding year, furnish to the Wealth-tax Officer a return in the prescribed form and verified in the prescribed manner setting forth his net wealth as on that valuation date. It is unnecessary to refer to the proviso to section 14(1), for admittedly it does not apply to the facts and the circumstances of the case. Broadly speaking, notwithstanding section 14(1) of the Act, the Wealth-tax Officer, under-section 14(2) of the Act, may issue a notice upon the executor requiring him to furnish a return as to the net wealth as on the relevant valuation date of the deceased if the Wealth-tax Officer forms an opinion that the deceased was liable to pay the tax. Section 3, as already stated, imposes a charge upon the net wealth of an !individual on the corresponding valuation date. Section 14 and section 19(2) do not impose any charge on the net wealth of any individual and, therefore, they must be read and understood subject to and in the context of the charge imposed by section 3 of the Act. Accordingly, the question of filing of any return for the year of his death under section 14 of the Act by a person who is no longer alive prior to the corresponding valuation date can never ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s October 31, 1959. The said assessment was accepted by the executors and, thereafter, they were served with a notice under section 14(2) of the Act by the Wealth-tax Officer requiring them to file a return of the estate left by the deceased. The High Court set aside the said notice by holding that they were not liable to be assessed for the assessment year 1961-62 and the said notice was issued without jurisdiction. In support of his contention that the executors before us are liable to be assessed under section 19(2) of the Act for the year of assessment in which Sir Edward died, Mr. Pal has placed reliance on the following observations made by their Lordships of the Bombay High Court at pages 653-654 of the report : See [1965] 56 ITR 648 (Bom) : " The provisions in sub-section (2) when read with sub-section (1) clearly indicate that the provisions in this section were to enable the revenue to recover wealth-tax in respect of the net wealth of the deceased person for the financial year in which the person died. Though such deceased person ceased to be the owner of all his properties at a moment which was not the end of the financial year, by legal fiction the tax was intended t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eceased assessee up to the end of the accounting year in which he has died and accordingly the income earned by him or accrued to him is assessable in the hands of his heirs or legal representatives under the Act, whereas the charge is on the net wealth of an individual on the corresponding valuation date under the Wealth-tax Act. The expression " assets " as defined in section 2(e) of the Act includes property of every description, barring those specified therein and in the Act. The term " net wealth ", as defined in section 2(m) of the Wealth-tax Act, " 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,..... is in excess of the aggregate value of all the debts owed by the assessee on the valuation date..............." The words underlined by me are of pivotal importance, for, they, read with section 3 of the Act, in no uncertain terms reveal that the " net wealth " is the net wealth on the corresponding valuation date and such net wealth is the net wealth belonging to the assessee on that valuation date which in relation to the wealth-tax assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e estate of a deceased person could not be assessed to wealth-tax. The Act as it stood prior to such introduction contemplated assessment of an individual only. That meant an existing individual. The assistance which Mr. B. L. Pal, learned counsel for the revenue, seeks to derive from the observations of the decision of the Bombay High Court in Jamnadas's case [1965] 56 ITR 648 (Bom) if accepted and applied literally would lead to anomalies. The relevant date for the purpose of the Wealth-tax Act being the date of valuation, if an individual ceases to exist before the valuation date then, for that financial year, the said individual is non-existent for the purpose of the Wealth-tax Act and that unit of wealth for that particular financial year must be considered to be the wealth of his estate which would exist on the date of the valuation. That being the position, the same unit of wealth cannot under section 19(2) be assessed as the wealth of the individual and at the same time also be assessed as the wealth of the estate of the deceased under section 19A. The manner of assessment as laid down under section 19(2) and section 19A are materially different. This will lead to differe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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