Wealth-tax under the Finance Act is treated as wealth-tax under the Wealth-tax Act, making the deduction disallowable.

Wealth-tax levied on closely held companies under section 40 of the Finance Act, 1983 is treated as wealth-tax chargeable under the Wealth-tax Act, 1957 because section 40 expressly charges it under that Act and requires the provision to be construed as one with it. The levy is therefore a revived wealth-tax under the existing statutory framework, not an independent impost outside the Wealth-tax Act. On that construction, the amount falls within the expression "wealth-tax" for section 40(a)(iia) of the Income-tax Act, 1961, and is disallowable. Authorities based on different statutory language were distinguished as inapplicable.

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Issues: Whether wealth-tax paid on closely-held companies under section 40 of the Finance Act, 1983 was wealth-tax chargeable under the Wealth-tax Act, 1957 so as to be disallowable under section 40(a)(iia) of the Income-tax Act, 1961.

Analysis: Section 40(1) of the Finance Act, 1983 expressly provides that wealth-tax shall be charged under the Wealth-tax Act, and section 40(7) directs that the section be construed as one with the Wealth-tax Act. The levy is therefore not an independent tax outside the Wealth-tax Act, but a revived levy under that Act with modified machinery and incidence. On that construction, the payment falls within the expression "wealth-tax" in section 40(a)(iia) of the Income-tax Act, 1961. The authorities relied upon by the assessee were held distinguishable because they turned on materially different statutory language.

Conclusion: The wealth-tax levied under section 40 of the Finance Act, 1983 was held to be wealth-tax chargeable under the Wealth-tax Act, 1957, and the deduction was correctly disallowed under section 40(a)(iia) of the Income-tax Act, 1961.

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