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1972 (8) TMI 63 - SC - Wealth-taxWhether the amounts of £1,99,940, £1,92,907 and £98,017 standing in the special reserve account in the books of the assessee-company were deductible in determining the net wealth of the company for the assessment years 1957-58, 1958-59 and 1959-60, respectively? Whether the amounts of £1,54,434, £2,08,934 and £2,62,811 standing in the shareholders' accounts as on the respective valuation dates were deductible in determining the net wealth of the company for the assessment years 1957-58, 1958-59 and 1959-60 respectively? Whether the amounts of £66,275, £131,180 and £274,587 out of the debentures of the company were allowable as debts owed by the company in the light of section 2(m) read with section 6 of the Wealth-tax Act? Held that:- Coming to ques 1 once we come to the conclusion that they were not the assets of the Government, which conclusion to our mind is obvious, then it follows that they are the assets of the company. It is not the case of the company that those assets belonged to some third party. Every item of asset must belong to someone. The question is to whom did it belong? The obvious answer is that it belonged to the company. It is not the case of the company that the asset in question came within any of the exemptions mentioned in the Act. Coming to the second question there was no debt owed by the company to the shareholders on that date. Hence the proposed dividend was not deductible in computing the net wealth of the appellant-company. The fact that a separate share-holders reserve had to be maintained by the company because of its agreement with the Government did not change the character of the asset. For 3 question the debenture loans in question cannot be taken into consideration in ascertaining the net wealth of the company in view of section 6 of the Act. Appeal dismissed.
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