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TMI Blog1987 (11) TMI 113X X X X Extracts X X X X X X X X Extracts X X X X ..... acts and in the circumstances of the case, the learned AAC of Wealth Tax, erred in holding that the income tax liability to the tune of Rs. 6,75,962 as claimed by the assessee, should be allowed in the computation of net wealth, even though, ultimately it was determined that there was no liability to tax as on the valuation date." 2. To appreciate the controversy properly, table consisting of details of refunds and demands, are to be looked into and they are as follows: Income Tax Assessment Year Date of Order Amount Date of Issue 1966-67 8th Sep., 1980 Rs. 12,174 21st May, 1983 1967-68 6th June, 1983 Rs. 6,703 7th May, 1983 1968-69 6th June, 1983 Rs. 7,517 7th June, 1983 1969-70 -do- Rs. 3,750 -do- 1967-68 8th Jul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cords it appears that there is no such liability outstanding on the date of assessment. It is not even a fact that the assessee was having such liability of date of filing the return. Within 8th July, 1983 the assessee was granted a total refund of Rs. 1,63,199 from asst. yr. 1967-68 to 1981-82 and the return was filed on 30th March, 1984. In view of the above net wealth tax of the assessee in computed as overleaf: Immovable property as last year 3,97,300 . Less : Exemption under s. 5(1)(Iv) 1,00,000 2,97,300 Movable properties as per details filed ... 2,18,935 Rs. 5,16,235 Income tax refund as per discussion . 1,63,199 . 6,79,434 Less: Liabilities to Edward Kaventer (P) Ltd. . 98,000 Net Wealth: 5,76,162 Rounded Off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11 (SC) and (4) CWT vs. Kantilal Manilal (1973) 88 ITR 125 (Guj) In these cases it was decided that in computing the net wealth of the assessee fot the wealth tax, the liabilities of income-tax wealth tax and gift tax which crystallised on the relevant valuation date as determined in the respective assessment orders as liabilities are to be deducted even though those assessment were finalised after the valuation date. As regards refunds, it was submitted, only after the receipt of the refund voucher the assessee could claim refund, hence it could be treated as an asset only after the receipt of the refund voucher as before that the assessee had no right to claim the fund. 7. We have considered the rival submissions. It is now well set ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his fact has to be looked into. Another point we must mention here that looking to the large number of assessment years involved, we feel it may be that appeal had been filed against the order made by ITO and WTO before the valuation date. There may be also case, where the demands originally raised, before those rectified under s. 154, remained unpaid for more than 12 months. In both the circumstances no tax liability can be deducted of debt in computing the net wealth of the assessee in view of s. 2(m) (iii) of the WT Act, 1957 (hereinafter referred to as the Act). We, therefore, set aside the order of the learned AAC to enable the WTO make a fresh order after giving opportunities to the assessee. We direct the WTO to allow the tax liabili ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the valuation date. If the refund is not crystallised on the valuation date exact tax liability to be crystallised on the valuation date cannot be determined. A tax liability is always determined after adjustment of tax already paid. If the tax already paid is less than the tax determined what remains is the tax liability vice versa if the tax paid is more than the tax determined it is a refund. The genesis of the refund is the excess payment as the genesis of demand is the short payment. In determining the wealth characters of them cannot be differentiated. Moreover, the best method will be to treat all the payment of taxes in advance T.D.S. and ad hoc payments as assets and total liability towards the taxes as debt. However the refund ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quent order can determine the exact amount of liability and the refund to be considered in computing the net wealth. Their Lordships of the Gujarat High Court in (1982) 133 ITR 800 (Guj) held that r. 1B manifested the intention of legislature to exclude advance tax from the preview of the Wealth-tax. This view was not also concurred by the Madras High Court in (1985) 152 ITR (Mad). In our opinion also, had there been such an intention of the legislature it could have been provided in exception provision of the WT Act. On the other hand, when they have specifically excluded the inclusion of advance tax in computing the net wealth as per r. 1D, it is evident it is otherwise includible. Another plea was taken whether the tax liability of a par ..... X X X X Extracts X X X X X X X X Extracts X X X X
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