9911796707
TMI Blog1990 (1) TMI 98X X X X Extracts X X X X X X X X Extracts X X X X ..... Kondke, proceedings under section 25(2) of the Wealth-tax Act were initiated by the Commissioner and for the detailed reasons set out by him in his order, it was held that the right to receive the share in the overflow from the pictures constituted an "asset" and was to be included in the computation of the net wealth of the assessee. A reference to the Special Bench decision of the Tribunal in the case of WTO v. Narendra Kumar Gupta [1983] 4 ITD 694 (Delhi) was invited on behalf of the assessee. The AAC, however, following the Commissioner's order under section 25(2), dated 30th March, 1986, passed in the case of Vijay D. Kondke, upheld the action of the WTO in including the assessee's share of the value of overflow from feature films in the net wealth of the assessee. However, with regard to the exact figure of such value to be included, he directed the WTO to reconsider the same after obtaining all the relevant details from the assessee by providing him with reasonable opportunities to rebut his case on the issue. 4. This appeal was heard along with the appeals in the other co-partners' case in WTA Nos. 433 to 436/Bom/1987 and 1118 to 1120/Bom/1986, wherein by an order of eve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee. The Special Bench concluded that the right in a film in a particular territory for a particular period would be an asset and that such an asset might or might not be transferable as such or might have also some value depending on the circumstances of the case. In these circumstances, the interests of the assessee in such right is assessed under section 2(e) of the Act. 6. The question, therefore, is whether such a right is not includible in the net wealth of the assessee because it could not be valued under section 7 of the Wealth-tax Act read with the rules therefor. When a particular right satisfies the condition of being an asset, the same, in our opinion, has to suffer the charge of tax under section 3 of the Wealth-tax Act, inasmuch as it provides for the levy of tax on the net wealth of an assessee on the valuation date. "Net wealth" is defined in section 2(m) to mean 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 the Wealth-tax Act, is in excess of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovides how the value of the assets of the business as a whole is to be determined. It provides that where the WTO determines under clause (a) of sub-section (2) of section 7, the net value of the assets of the business as a whole having regard to the balance-sheet of such business, he shall make the adjustments specified in rules 2B, 2C, 2D, 2E, 2F and 2G. We are concerned in this case with Rule 2C which reads as under : "2C. The value of an asset not disclosed in the balance-sheet shall be taken to be-- (a) in the case of a debt due to the assessee, the amount due to the assessee under that debt, and where such amount or part thereof has been allowed as a deduction under clause (vii) of sub-section (1) of section 36 of the Income-tax Act, 1961, in computing the total income of the assessee for the relevant year for the purposes of assessment under that Act, the amount of the debt as reduced by the deduction to be allowed ; (b) in the case of goodwill purchased by the assessee for a price, its market value or the price actually paid by him, whichever is less ; (c) in the case of managing agency rights purchased by the assessee for a price, its market value or the price act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that even though the accounts of the assessee were maintained on cash basis, the interest due on accrual basis, though not realised, on the outstandings of the money-lending business were liable to be included in the net wealth of the assessee. 9. It was contended by the learned counsel for the assessee that Rule 2C(d) was not considered by their Lordships of the Supreme Court and that it was a case of accrued right in the interest on lending the money by the assessee and, therefore, that case would have no application. We, however, do not agree with this contention of the assessee as well. It was held by the Bombay High Court in the case of CWT v. V.M. Shah [1987] 33 Taxman 323/[1988] 170 ITR 17 that what has to be seen in the context of rule 2C was whether any asset has not been shown in the balance-sheet and if there is an asset as defined and it has not, for good reason or otherwise, been shown in the balance-sheet, the WTO is entitled to apply the provisions of rule 2C. The word "disclosed" therein would only mean shown and it must follow that the WTO was entitled in the case to apply the provisions of rule 2C. In the said case also, a similar contention was raised by Shri P ..... X X X X Extracts X X X X X X X X Extracts X X X X
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