Law: Wealth Tax Act, (XV of 1963)

Section: 17B,2(1)(16)(ii)

Wealth Tax Act (XV of 1963)---Ss. 17B & 2(1)(16)(ii)---Powers of Inspecting Assistant Commissioner to revise Wealth Tax Officer's, order---Net wealth---Liabilities not against any assets created by the assessee---Disallowance of---Inspecting Assistant Commissioner revised the assessment by adding .the liabilities on the ground that such liabilities were not against any assets created and offered for wealth tax and were not allowable---Validity---Law did not require that a taxable asset must represent a liability---Law clearly provided that a liability, which was incurred for acquiring an asset which was not taxable, or which was secured on an asset which was not taxable, will not be allowed as a deduction---Person may incur a liability which was not for acquiring any asset or the assets acquired out of such liability may have been destroyed etc. ---Provision of S.2(1)(16) of the Wealth Tax Act, 1963 provided that such liability had to be allowed as a deduction from the total value of assets includible in net wealth---Order of the Inspecting Assistant Commissioner was cancelled by the' Tribunal. ORDER INAM ELLAHI SHEIKH (CHAIRMAN). ---This is the appeal of a wealth tax assessee against an order, dated 12-12-2000 recorded by the learned IAC of Income-tax/Wealth Tax, Range-II, Zone-A, Karachi under section 17-B of the Wealth Tax Act, 1963 (hereinafter called the Act) whereby the assessment already framed under section 16(3) of the Act was- found to be erroneous insofar as prejudicial to the interest of Revenue and modified by disallowing certain liabilities. 2. The relevant facts in brief are that the assessee had been assessed at a taxable wealth of Rs.1,474,712 after allowing certain liabilities. The IAC found that the assessee had been allowed business liabilities amounting to Rs.1,730,000 which, according to the learned IAC, were not against- any assets created and offered for wealth tax. Thus, according to the learned JAC, the Assessing Officer had erroneously allowed the liabilities and he asked the assessee to show cause as to why the same should not be disallowed.. Since the assessee failed to provide any -satisfactory answer, the learned IAC added the…

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