TaxTMI 
TaxTMI 
1987 (11) TMI 113
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....ssessment year. (2) That, on the facts and in the circumstances of the case, the learned AAC of Wealth Tax, erred in holding that the income tax liability to the tune of Rs. 6,75,962 as claimed by the assessee, should be allowed in the computation of net wealth, even though, ultimately it was determined that there was no liability to tax as on the valuation date." 2. To appreciate the controversy properly, table consisting of details of refunds and demands, are to be looked into and they are as follows: Income Tax Assessment Year Date of Order Amount Date of Issue 1966-67 8th Sep., 1980 Rs. 12,174 21st May, 1983 1967-68 6th June, 1983 Rs. 6,703 7th May, 1983 1968-69 6th June, 1983 Rs. 7,....
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....sp; Rs. 5,46,364 3. The WTO wrote a very short order as follows: "Seen return filed on 30th March, 1984. In response to notice under s. 16(2) Sri K.K. Mondal, adv. A/R appeared fro time to time. The case discussed with him. This year the assessee has claimed Income-tax liability of Rs. 6,75,962. On verification on the records it appears that there is no such liability outstanding on the date of assessment. It is not even a fact that the assessee was having such liability of date of filing the return. Within 8th July, 1983 the assessee was granted a total refund of Rs. 1,63,199 from asst. yr. 1967-68 to 1981-82 and the return was filed on 30th March, 1984. In view of the above net wealth tax of the assessee in computed as ....
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....nsel of the assessee, Sri K.K. Mondal, supported the order of the learned AAC arguing that on the basis of the following decisions of the Supreme Court and Gujarat High Court the order of the learned AAC is unassailable: (1) CWT vs. K.S.N. Bhatt (1983) 37 CTR (SC) 273: (1984) 145 ITR 1 (SC) (2) CWT vs. Lallubhai (1983) 37 CTR (SC) 277 : (1984) 145 ITR 7 (SC) (3) CWT vs. V.V. Mehta (1983) 37 CTR (SC) 280 : (1984) 145 ITR 11 (SC) and (4) CWT vs. Kantilal Manilal (1973) 88 ITR 125 (Guj) In these cases it was decided that in computing the net wealth of the assessee fot the wealth tax, the liabilities of income-tax wealth tax and gift tax which crystallised on the relevant valuation date as determined in the respective assessment ....
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....should be considered on the same basis as if it had been made in the original assessment proceedings. If however, it is found, as claimed by the Department in its grounds of appeal the demand raised after the orders under s. 154 had been ultimately reduced, the assessee will be entitled to deductions equally to ultimate tax liabilities. If there is no ultimate tax liability as claimed by the Department no deduction can be allowed. This fact has to be looked into. Another point we must mention here that looking to the large number of assessment years involved, we feel it may be that appeal had been filed against the order made by ITO and WTO before the valuation date. There may be also case, where the demands originally raised, before those ....
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....id down by the Supreme Court reported in the cases of (1984) 145 ITR 1, 7 and 11 (SC). The Supreme Court in the above cases had decided that the tax liabilities (income tax, wealth-tax and gift tax) crystallised on the valuation date though it may be determined by orders subsequent to the valuation date. We do not find any ostensible reason to differ from the view in respect of the refund. That is to say, refund is also crystallised on the valuation date. If the refund is not crystallised on the valuation date exact tax liability to be crystallised on the valuation date cannot be determined. A tax liability is always determined after adjustment of tax already paid. If the tax already paid is less than the tax determined what remains is the ....
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.... the assessee must be examined with reference to the position obtaining on the valuation date, and that nothing happening subsequently would be considered in computing the net wealth. Their lordships rejecting the contention held that they were unable to agree with the view taken by the appellate Tribunal. Therefore, whether the exact amount of tax liability or the refund not known on the valuation date is not crucial issue. Any subsequent order can determine the exact amount of liability and the refund to be considered in computing the net wealth. Their Lordships of the Gujarat High Court in (1982) 133 ITR 800 (Guj) held that r. 1B manifested the intention of legislature to exclude advance tax from the preview of the Wealth-tax. This view ....