Law:

Section:

Section 2(m) of the Wealth-tax Act, 1957 - Net wealth - Asset belonging to - Whether amount of tax deducted at source under section 194 of Income-tax Act, from dividend declared by a company and paid to assessee was liable to be included while computing assessee's net wealth - Held, no Facts For the assessment year 1974-75, the assessee received certain amount as net dividend, after deduction at source of a sum as tax from the gross dividend. The WTO treated the total gross dividend amount as an accretion to her net wealth and made assessment accordingly. Both the AAC and the Tribunal rejected the assessee's contention that the tax deducted at source under section 194 was not part of her assets and was, thus, not includible in her net wealth for purpose of assessment. On reference: Held The assessee was in law deemed to have received as income the entire dividend declared, and was at the same time deemed to have paid the tax due thereon when the tax was deducted at source by the company. Notio-nally, therefore, with the declaration of the dividend and the deduction of the income-tax at source, the assessee simultaneously received the entirety of the dividend and paid the income-tax thereon in accordance with the applicable rates. In such a case, the assessee was no longer in possession or command of the amount and that amount was no longer part of his assets. It represented neither her assets nor her debts. In computing the net wealth, therefore, there was no question of either including or deducting any amount which had been already paid as tax. The amount which had been deducted and retained by the company, was an amount which was no longer in the assessee's possession although it had been but notionally and simultaneously received as income and paid as income-tax by the assessee. In one moment of time the receipt became a payment, and, therefore, what was notionally received was no longer with the assessee. For these reasons, the tax deducted at source under section 194 did not form part of the assessee's net wealth. Case referred to CWT v. Kantilal Manilal [1985] 152 ITR 447 (SC). N. Srinivasan and P. Krishna Moorthy for the Applicant. P.K.R. Menon for the…

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