Commissioner of Wealth Tax vs Shew Bhagwan Poddar

Suhas Chandra Sen, J.—The following question of law has been referred by the Tribunal to this court u/s 27(3) of the Wealth-tax Act, 1957 ("the Act") :

"Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the amount of tax paid by the assessee on the basis of voluntary disclosure of income u/s 68 of the Finance Act, 1965, after the relevant valuation date was deductible in computing the net wealth of the assessee u/s 2(m) of the Wealth-tax Act, 1957 V"

The relevant assessment year is 1965-66.

In this case, both the Appellate Assistant Commissioner and the Tribunal were of the view that, the tax liability on the disclosed income which was paid to the Reserve Bank of India on May 27, 1965, should be deducted for the purpose of valuation of the assessee''s net wealth. The language of Section 2(m)(iii) is also quite clear.

We fail to see how the amount of tax actually paid in respect of the relevant assessment year cannot be allowed as deduction. The liability to pay tax arises at least on the last day of the relevant financial year. Quantification of the liability may be deferred but the accrual of the liability cannot be deferred.

Under the circumstances, the question is answered in the affirmative-and in favour of the assessee.

There will be no order as to costs.

Bhagabati Prasad Banerjee, J.

I agree.