TMI Blog1985 (3) TMI 235X X X X Extracts X X X X X X X X Extracts X X X X ..... 3-1985 - Judge(s) : R. S. PATHAK. and E. S. VENKATARAMAIAH. JUDGMENT The judgment of the court was delivered by PATHAK J.- These appeals are directed against the judgment of the Gujarat High Court disposing of a wealth-tax reference and answering the following question of law against the Revenue " Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the provisions of s. 2(m)(iii)(a) were not applicable in respect of liabilities arising under the wealth-tax assessments of the assessee for the assessment years 1960-61 and 1961-62 ? " For the purpose of determining the assessee's net wealth in the assessment proceedings under the W.T. Act in respect of the assessment years 1961-62 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was not entitled to a deduction of the wealth-tax liability of Rs. 39,692 for the assessment year 1961-62, as he had disputed that liability in appeal and the deduction was barred by s. 2(m)(iii(a) of the Act. The Appellate Tribunal did not accept the contention of the Revenue and held that s. 2(m)(iii)(a) was not attracted in respect of those liabilities as they had not become payable on the relevant valuation dates. At the instance of the Revenue, a reference, being Wealth-tax Reference No. 20 of 1970, was made to the Gujarat High Court for its opinion on the question of law set forth earlier. It may be mentioned that another question was also framed in that reference, and that this reference along with several other references were dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were not pending on the valuation dates, and, therefore, the further requirement, according to him, of the statute was not satisfied. Section 2(m) of the W.T. Act provides: " (m) 'net wealth' means the amount by which the aggregate value computed in accordance with the provisions of this Act of all the assets, wherever located, belonging to the assessee on the valuation date, including assets required to be included in his net wealth as on that date under this Act, is in excess of the aggregate value of all the debts owed by the assessee on the valuation date other than-... (iii) the amount of the tax, penalty or interest payable in consequence of any order passed under or in pursuance of this Act or any law relating to taxation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deduction in the wealth-tax assessment for the assessment year 1961-62 relates to Rs. 22,679 representing the wealth-tax liability for the assessment year 1960-61. The assessment order for the assessment year, 1960-61 was made on March 24, 1961, but the notice of damand was served on the assessee on April 11, 1961. It is apparent that the notice of demand was served some days after the valuation date, i.e., March 31, 1961. In the wealth-tax assessment for the assessment year 1962-63, the deduction claimed relates to the wealth-tax liability of Rs. 39,692 for the assessment year 1961-62. The assessment order was made on March 23, 1962, but the notice of demand was served on April II, 1962, a few days after the relevant valuation date, March ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the assessment of an assessee are contained in ss. 14 to 17A of the W.T. Act. The notice of demand requiring payment of the tax, interest or penalty is issued pursuant to s. 30 of the Act. If the amount remains unpaid within the periods specified in the notice, the amount of the tax is said to be outstanding. A question was raised whether for the purpose of attracting s. 2(m)(iii)(a) it is not sufficient that the tax liability has accrued and it is necessary that a tax demand should have been made by the assessing authority. It seems to us that s. 2(m)(iii)(a) comes into play only after demand for payment of tax has been made. The clause, read in its entirety, speaks of a debt owed by the assessee represented by an amount of tax " pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nalty or interest envisaged in that provision is outstanding on the valuation date, but it must also show that the amount is claimed by the assessee in appeal, revision or other proceeding as not being payable by him. The question is whether it is a necessary requirement of the provision that the appeal, revision or other proceeding should be pending on the valuation date itself or it suffices that the appeal, revision or other proceeding is filed subsequent to the valuation date. In the present case, the appeal against the wealth-tax assessment order for the assessment year 1960-61 was filed on May 9, 1961, and the appeal against the wealth-tax assessment order for the assessment year 1961-62 was filed on May 9, 1962. Both the appeals were ..... X X X X Extracts X X X X X X X X Extracts X X X X
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