Law: Wealth Tax Act, 1957

Section: 2(m),27(1)

Law: Income Tax Act, 1961

Section: 4

Section 2(m) of the Wealth-tax Act, 1957, read with section 68 of the Finance Act, 1956 - Net wealth - Debt owed - Assessment years 1960-61 to 1965-66 - Whether income-tax paid on amount disclosed under section 68 of Finance Act, 1965, was deductible in computing net wealth of assessee - Held, yes FACTS In pursuance of the Finance Act, 1965, the assessee disclosed certain income voluntarily and paid tax thereon. In the wealth-tax return, the assessee included the disclosed amount after deducting the tax paid thereon. The WTO, considered that the tax amount was not liable to be deducted in computing the wealth of the assessee and, accordingly, assessed the total amount as the undisclosed wealth. The AAC also held that the assessee was not entitled to the deduction of the tax in computing the net wealth. This view was upheld by the Tribunal. On reference : HELD The tax payable under the Income-tax Act, on the amount disclosed under section 68 of the Finance Act of 1965, was deductible in computing the net wealth for the relevant assessment year. Note: The case was decided in favour of the assessee. CASES REFERRED TO Kesoram Industries & Cotton Mills Ltd. v. CWT [1966] 59 ITR 767 (SC), H.H. Setu Parvati Bayi v. CWT [1968] 69 ITR 864 (SC), CIT v. Vijay Kumar Behal [1971] 81 ITR 202 (Punj.), CWT v. Giridhari Lal [1975] 99 ITR 79 (Delhi), CWT v. Keshardeo S. Morarka [1977] 107 ITR 576 (Bom.), CWTv. B.K. Sharma [1977] 110 ITR 902 (All.), Babu Naidu v. WTO [1978] 112 341 (Ker.) and CWT v. Ahmed Ibrahim Sahigara [1974] 93 ITR 288 (Guj.). JUDGMENT V. Ramaswami, J.-The following question has been referred at the instance of the assessee under s. 27(1) of the W.T. Act, 1957: "Whether, on the facts and in the circumstances of the case, the tax payable under the Income-tax Act, on the amount disclosed under section 68 of the Finance Act of 1965, is deductible in computing the net wealth for the assessment years 1960-61 to 1965-66?" The facts leading to the reference are as follows: In pursuance of the Finance Act of 1965, the assessee made a declaration disclosing voluntarily 'an income of Rs. 3 lakhs derived by him prior to the assessment year 1960-61, and offering the…

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