Law:

Section:

Section 2(m) of the Wealth-tax Act, 1957, read with section 68 of the Finance Act, 1965 - Net wealth - Debt owed - Assessment years 1959-60 to 1964-65 - Whether amount declared by partners on behalf of their firm under section 68(1) of Finance Act would have same character as that of total income assessable under Income-tax Act and tax paid by them at rate prescribed by section 68(3) of Finance Act would have character of income-tax which was payable by virtue of charging provisions of Income-tax Act and, therefore, tax liability on that amount which had not been discharged by valuation date would be debt owed liable to be deducted from income declared by partners in order to arrive at their net wealth - Held, yes Section 68 of the Finance Act, 1965 - Voluntary disclosure of income - Assessment years 1959-60 to 1964-65 - Whether Finance Acts cannot impose tax on any amount which is not total income of person under Indian Income-tax Act, 1922 or Income-tax Act, 1961 nor do Finance Acts subject to tax any income which is not chargeable under charging sections of said Acts - Held, yes FACTS The assessees were partners of a firm having equal shares. The firm made a voluntary disclosure of its income under section 68 of the Finance Act, 1965. The disclosure related to undisclosed income and cash credits entered in the books. The voluntary disclosure made by the firm was accepted by the department. On receiving information of the voluntary disclosure made by the firm, the WTO reopened the wealth-tax assessments of the assessees for the assessment years 1959-60 to 1964-65, under section 17 and included therein one-half of the amount disclosed by the firm by its declaration, in the net wealth of each of the assessees. The assessees claimed that the tax liability on the amount so included should be deducted and that only the balance of the amount should be included in the net wealth of the assessees. The WTO rejected the claim of the assessees on the ground that the liability for the payment of tax did not arise before 1965 when the Finance Act was promulgated and the declarations were made by the firm thereunder and that during the relevant assessment years the tax…

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