Law: Wealth Tax Act, (XV of 1963)

Section: 46

Law: Wealth Tax Rules, 1963

Section: 8(2)

(a) Company--- ----Shareholder---Status---Shareholders in a company are not creditors of the company but own equity in the company and are the owners of the company. (b) Wealth Tax Act (XV of 1963)--- ----S. 7---Wealth Tax Rules, 1963, R.8(2)---Valuation of assets---Chose in action---Actionable claim---Determination of value---Procedure---Money deposited by a person with another person including a Bank is not cash---When a person deposits motley in a Bank or in another institution the cash he gives to the Bank or the institution, becomes the property of the banker/institution--­What belongs to the depositor of money is not the cash but the asset known as "chose in action" or "actionable claim"---Value of "chose in action" or "actionable claim" as an asset for the purposes of Wealth Tax Act is determinable with reference to its market price on the valuation date---If the depositor can withdraw the money from the Bank/institution against which he has the claim of chose in action at full price of the demand the value of the chose in action will be equal to the value of the money he has deposited but if the depositor cannot withdraw the amount at full price the value of the chose in action will be the price at which he can assign that right to another person or any other person would be willing to buy the depositors right of chose in action--­Value of the chose in action as an asset therefore would depend upon the credibility of the debtor---Where the institution in which the assessee had deposited the money had refused to return the deposit on account of its bankruptcy, assessee's right of chose in action to recover the deposit in the institution was zero as- no one was willing to buy any claim of chose in action against the institution---Tribunal, in circumstances, directed the Wealth Tax Officer to determine the value of the deposit of assessee in the institution at zero. R v. Davenport (1954) 1 All ER 602; (1954) 1 WLR 569; (1984) 3 All ER 369; Practice and Law of Banking by Sheldon and Fidler 11th Edn. and 3 Halsbury's Laws of England 4th Edn., para. 40 ref. Commissioner of Wealth Tax v. Habib Dost Muhammad 1993 PTD 105 distinguished. (c) Wealth tax--…

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