Law:

Section:

Section 2(m) of the Wealth-tax Act, 1957, read with the defence of India (amendment) boles, 1963 - Net wealth - Assets belonging to assessee - In June and august 1965 as a result of searches conducted on premises of assessee, some gold was recovered and confiscated by central excise -WTO included value of said gold in computing net wealth of assessee for assessment year 1964-65 for which valuation date was Diwali 1963 - WTO also did not allow to assessee deduction of cumulative tax liability under section 2(m) - Tribunal, however, held that as gold found in assessee's possession was a prohibited article, it could not belong to assessee and that as it had no market value, its value would be nil on valuation date - Tribunal also allowed deduction of cumulative tax liability under section 2(m) - Whether even if property in question was incapable of being sold in open market, assessee's interest therein had to be valued and WTO was right in including value of said gold while computing assessee's net-wealth - Held, yes Section 2(m) of the Wealth-tax Act - Net wealth - Debt owed - Whether in view of facts stated under the head 'Net wealth - Assets belonging to assessee' deduction of cumulative tax liability of assessee outstanding on valuation date was rightly allowed by Tribunal - Held, yes Facts For the assessment year 1964-65, the valuation date of the assessee was Diwali 1963. In June and August 1965, searches were conducted on the premises of the assessee by the central excise department and certain quantities of gold were recovered. As the assessee had not made a declaration with respect to the aforesaid gold, the central excise authorities confiscated the same. While framing assessment for the assessment year 1964-65, the WTO included the value of said gold in computing net wealth of the assessee. On appeal, the assessee contended that in view of his failure to declare the gold as required by law, it was liable to confiscation and, hence, he could not be held to be the owner of the gold on the date of valuation. The assessee further contended that the gold in question, being a contraband article had no value as it could not be legally sold in open market and…

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