1968 (6) TMI 4
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....of assets to Rs. 342 and on the basis of yield Rs. 537 per share. 1959-60 ditto 2,246 1,658 The Wealth-tax Officer, in determining the value of these shares, tried to find the break-up value on the basis of the assets and liabilities of the company as per balance-sheets on or near about the valuation dates. He did not, however, allow any deduction for provision for taxation and provision for wealth-tax aggregating to Rs. 51,35,097 for the assessment year 1958-59. The Appellate Assistant Commissioner recomputed the value of the shares by the same method by deducting from the value of the assets, bad debts amounting to Rs. 2,35,855 for 1957-58, Rs. 2,80,008 for 1958-59 and Rs. 3,15,889 for 1959-60. He had also granted reduction for all the years of the value of the goodwill to the extent of Rs. 10 lakhs and the value of the leasehold property to the extent of Rs. 5 lakhs, He made additions for the proposed dividends amounting to Rs. 1,20,000 for 1957-58 and Rs. 1,20,000 for 1959-60. The department as well as the assessee were aggrieved by the Appellate Assistant Commissioner's valuation aforesaid and appeals were preferred to the Tribunal. Before the Appellate Tribunal there was n....
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....the Wealth-tax Act introduced by the Finance Act of 1959 was ultra vires the Constitution and, moreover, since the Income-tax Officer had started certificate proceedings for recovery of the said amout, it ceased to be an income-tax demand and became a civil debt and was, therefore, allowable to be deducted out of the assessee's net wealth. The Appellate Assistant Commissioner negatived these contentions. He held that just because the amount was covered by certificates for the tax arrears it did not cease to be arrears of taxes. So far as the amendment of section 2(m) was concerned, the Appellate Assistant Commissioner observed that the Wealth-tax Act did not make a distinction between taxes covered by a certificate proceeding and a demand not covered by such coercive measure under the Income-tax Act and the legislature was competent to define the limit and the scope of the meaning of the word to " wealth ". So far as these contentions are concerned the Tribunal held that, as the demand for arrears of income-tax were being sought to be realised through certificate proceeding, the assessee became a certificate debtor ; the amount specified in the certificate became a certificate de....
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....82 being the amount of certificate under Public Demands Recovery Act ; (v) provision for taxation ; and (vi) proposed dividends in the years 1957-58 and 1959-60 ?" With regard to question No. 1 in this reference, both parties agree that the Supreme Court has repeatedly held that this court in the exercise of the advisory jurisdiction under the Indian Income-tax Act, 1922, the Sales Tax Act and the Agricultural Income-tax Act cannot go into the question of the vires of the Constitution or of any legislation. In our view, the same principles would apply to a reference under the Wealth-tax Act, and, as such, the question is answered in the negative. Mr. Debi Pal, learned counsel for the assessee, however, wishes to have it recorded that he is not giving up this point and would try, if so advised, to agitate it before the appropriate court. We now come to the second question. In Commissioner of Income-tax v. Jhagrakhand Collieries (Private) Ltd., it has been held that if income-tax payable under an order of assessment made under the Income-tax Act remains outstanding for a period of more than 12 months on the valuation date, the provisions of section. 2(m)(iii)(b) will disentitle the....
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....vable, but does not include, inter alia, (i) agricultural land and growing crops, grass or standing trees on such land, (ii) any building owned or occupied by a cultivator or receiver of rent or revenue out of agricultural land provided that the building is on or in the immediate vicinity of the land and is a building which the cultivator or the receiver of rent or revenue by reason of his connection with the land requires as a dwelling-house or a store house or an out-house, (iii) animals, etc. The definition of " assets " in the Wealth-tax Act, therefore, appears to be an artificial definition for purposes of this Act only. Then again, section 5 provides that wealth-tax shall not be payable by an assessee in respect of, inter alia, the tools and implements used by the assessee for the raising of agricultural produce ; ten-year treasury savings certificates, fifteen-year annuity certificates, deposits in post office savings banks, post office cash certificates, post office national savings certificates, twelve-year national plan savings certificates, ten-year defence deposit certificates and twelve-year national defence certificates held by the assessee, etc. Here again, it is ....
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....is employed by it in a new and separate unit set up after the commencement of this Act by way of substantial expansion of its undertaking ; provided that (a) a separate account is maintained in respect of such units, and (b) the conditions specified in clause (d) of section 45 are complied with in relation to the establishment of such unit ; provided further that this exemption shall apply to any such company only for a period of five successive assessment years commencing with the assessment year next following the date on which the company commences operations for the establishment of such unit. These provisions also show that certain industrial undertakings are completely exempted from payment of wealth-tax. We need not multiply these instances any further. The reason why we have referred to the above provisions of the Wealth-tax Act is that in determining the net wealth of a company for the purpose of ascertaining the " break-up value " of its shares, the net wealth computed in accordance with the provisions of the Wealth-tax Act cannot be a safe guide or a sound basis. In Dymond on Death Duties, 14th edition, at page 578, it is stated that " break-up value " is the net amoun....
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....o replace it by actual value) 5,00,000 Other liabilities as per b/s 1,13,52,000 1,30,87,000 38,65,900 Add Proposed dividend 1,20,000 39,85,900 This divided by 2,400 shares gives the value of Rs. 1,660 per share. In allowing the liabilities of Rs. 1,13,52,000 I have allowed the entire provision for taxation and unpaid dividends, etc., as a deduction. Taking into account the facts of the case the value of the shares seems to be reasonable. The Wealth-tax Officer should substitute the value of Rs. 1,660 per share in the place of Rs. 2,330 taken by him." This paragraph shows that (1) bad debts, (2) goodwill, (3) value of leasehold lands, (4) provision for taxation, and (5) unpaid dividends were allowed as deductions by the Appellate Assistant Commissioner. The Tribunal has said at pages 38 and 39: " Regarding the shares of Jhagrakhand Collieries the value per share shall now be taken to be the one as found by the Tribunal while valuing the net wealth of the colliery itself, mention of which has been made in our order passed in W.T.As. Nos. 777 to 779 of 1961-62, which are appeals by the department. In accordance with that discussion, the value of the shares of Jhagrakhand Colli....
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....Sri K. L. Roy (as he then was), the Judicial Member. We have naturally to refer to the facts and circumstances in Narendra Singh Singhi's case. These are the subject-matters of Wealth-tax Reference No. 11 of 1965 now pending before this court. We have looked into the paper-book of this reference. We find from page 40 of the paperbook (in the Wealth-tax Reference No. 11 of 1965) that the Tribunal has made more or less the same order which we have already quoted above. In this statement of the case, however, question No. 4 has been referred to this court in the same form as has been done in the instant reference. And in paragraphs 11 and 12 of this statement of the case signed by Sri S. P. Sinha, Judicial Member, and Sri J. Das, Accountant Member, it is stated as follows : Paragraph 11.-" It was next suggested that question No. 4 of the questions of law framed ought not to be referred because according to the Commissioner of Wealth-tax, firstly, it did not arise out of the Tribunal's order..." Paragraph 12.-" We do not agree with the suggestion ...... Firstly, this question, namely, question No. 4, obviously arises out of the Tribunal's order inasmuch as the same had been raised ....