Change in accounting year can eliminate the valuation date for earlier wealth-tax assessment

Where an assessee's change in accounting year was accepted by the income-tax authority, the relevant income became assessable only in the later assessment year, and the earlier year ceased to have a previous year for income-tax purposes. On that basis, the Calcutta HC stated that there was then no corresponding valuation date under section 2(q) of the Wealth-tax Act for the earlier year, because the valuation date depends on the last day of the relevant previous year. The result was that no wealth-tax assessment could be made for assessment year 1957-58.

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Issues: Whether, on the facts and in the circumstances of the case, no assessment could be made under the Wealth-tax Act on the assessee for the assessment year 1957-58 because, after the change in its accounting year, there was no previous year for that assessment year and therefore no corresponding valuation date.

Analysis: The definition of "valuation date" in section 2(q) of the Wealth-tax Act depends on the last day of the previous year as defined in section 2(11) of the Income-tax Act, 1922, if an assessment were to be made for that year. Once the Income-tax Officer accepted the assessee's request to alter the closing date of accounts and to assess the entire period from 1 April 1956 to 30 June 1957 only in assessment year 1958-59, that period became the previous year for 1958-59. In consequence, there was no previous year for income-tax purposes for assessment year 1957-58 and, correspondingly, no valuation date for wealth-tax assessment for that year.

Conclusion: The question was answered in the affirmative and in favour of the assessee; no wealth-tax assessment could be made for assessment year 1957-58.

Ratio Decidendi: Where, by a valid change in the accounting year accepted by the income-tax authority, the relevant income is assessable only in a later assessment year, the earlier year ceases to have a previous year for income-tax purposes and cannot supply a valuation date under the Wealth-tax Act.

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