Maharani Rajlakshmi Kumari Devi vs Commissioner of Wealth Tax

Susanta Chatterji, J.—The present rule was issued on September 17, 1979, at the instance of the writ petitioner praying, inter alia, for a writ of mandamus commanding the respondents to cancel and/or rescind the order dated May 7, 1979, passed u/s 25(1) of the Wealth-tax Act by the Commissioner of Wealth-tax, West Bengal-III, Calcutta, in respect of the assessment year 1976-77 in so far as the said order disallowed the claim of Rs. 1,05,274 being the wealth-tax liability as deductible in computing the net wealth of the petitioner, It is stated that, for the assessment year 1976-77, the petitioner filed two returns of wealth, one in the capacity of an individual showing a net wealth of Rs. 9,42,740 and the other in the capacity of a private trust showing a net wealth of Rs. 2,31,680. The Wealth-tax Officer is alleged to have passed a single assessment order clubbing the wealth under the two returns filed by the petitioner and computed the net wealth of the petitioner at Rs. 12,09,400 u/s 16(3) of the said Act. The petitioner filed a revision petition dated March 6, 1978, u/s 25(1) of the said Act before the Commissioner of Income Tax, West Bengal-III, Calcutta, praying for various reliefs. In the said application, the petitioner allegedly claimed by way of deduction, inter alia, the wealth-tax liability of a sum of Rs. 1,05,274 being the total amount of tax demanded in respect of the assessment years 1974-75 and 1975-76 after adjustment of the tax paid by way of self-assessment. The same amount was claimed by the petitioner as a debt owed on the valuation date, i.e., March 31, 1976, and, therefore, was liable to be deducted in computing the net wealth of the petitioner. The Commissioner of Wealth-tax, however, by an order dated May 7, 1979, dismissed the claim of wealth-tax liability amounting to Rs. 1,05,274 as a deduction in computing the net wealth on the ground that although the assessment order for the assessment years 1974-75 and 1975-76 were passed on April 30, 1976 (?), the demand notices were served on the petitioner on April 30, 1976 (?), and, as such, on the valuation date, i.e., on March 31, 1976, relevant for the assessment year 1976-77, the said liability did not exist. Being aggrieved, the petitioner has come to this court on the ground that the wealth-tax liability amounting to Rs. 1,05,274 not only did exist before the relevant valuation date but also was quantified through the process of assessment on March 30, 1976, i.e., before the relevant valuation date which was March 31, 1976, and, as such, the said liability was to be deducted in computing the net wealth of the petitioner.

The writ petition is contested by filing an affidavit-in-opposition. It is disclosed that, in the wealth-tax assessment of the assessee for the assessment year 1976-77, the Wealth-tax Officer did not allow the deduction of Rs. 1,05,274 being wealth-tax liability arising from the assessment orders for the assessment years 1974-75 and 1975-76 passed on March 30, 1976, as revised on April 30, 1976. The assessee''s house property at Tilak Marg, New Delhi, was valued at Rs. 2,25,000 and the assessee has filed a writ petition u/s 25(1) of the Wealth-tax Act, 1957, before the Commissioner of Wealth-tax objecting to the disallowance of the deduction in respect of wealth-tax liability. The Commissioner of Wealth-tax, West Bengal-Ill, by his order dated May 7, 1979, rejected the assessee''s claim for deduction of wealth-tax liability, arising from the assessment orders for the assessment years 1974-75 and 1975-76 on the ground that the assessments were disputed in appeal and further although the assessment orders for the above two years were passed on March 30, 1976, the demand notices were served on April 30, 1976, so that, on the valuation date March 31, 1976, this liability did not exist. It is further disclosed that the valuation of the house property at Tilak Marg, New Delhi, the Commissioner of Wealth-tax, West Bengal-Ill, Calcutta, after considering the fact that the property had all along been in the possession of the Government, having been requisitioned long ago and that it was only recently, i.e., on October 31, 1978, that the assessee obtained the property on being de-requisitioned so that on the relevant valuation date, there was no prospect of the property being de-requisitioned determining the valuation of Rs. 60,000 on the basis of the yield method.

Dr. Pal, appearing for the writ petitioner, argued that the only question which arises is whether the wealth-tax liability for the assessment years 1974-75 and 1975-76 is to be treated as debts owed by the assessee on the relevant valuation dates.

It is further argued that the wealth-tax liability like the Income Tax liability becomes crystallised on the valuation date even though the tax is levied and becomes payable later. The wealth-tax liability of an assessee on the valuation date is "debt owed" within the meaning of Section 2(m) of the Wealth-tax Act and should be deducted from the estimated value of all the assets as on the valuation date irrespective of the fact whether any assessment has been made or not by that time. The liability to wealth-tax becomes an accrued liability on the valuation date.

Mr. Nanda Lal Pal, learned advocate appearing for the respondents, has drawn the attention of the court to various materials on record and particularly the impugned order passed by the Commissioner of Wealth-tax in revision. He has submitted that the writ petition is misconceived and the impugned order does not suffer from any inherent defect.

Having heard the learned lawyers appearing for the respective parties and looking to the materials in depth, the only question which arises before this court is to ascertain whether the impugned order dated May 7, 1979, passed by the Commissioner of Wealth-tax, West Bengal-III, u/s 25(1) of the Wealth-tax Act, 1957, in respect of the assessment year 1976-77 suffers from any defect or not. The question raised on behalf of the petitioner is whether the liability of Rs. 1,05,274 as deductible in computing the net wealth of the petitioner would be allowed or not. For the consideration of the said question, the relevant date is material. The Commissioner of Wealth-tax has duly considered this aspect of the matter and it is found that, on the relevant date of assessment, this liability did not exist and he has rightly refused the claim of the petitioner.

After considering the matter in detail, this court does not find that there is any irregularity and/or illegality and there is no question of jurisdictional error. This court does not find any convincing submission necessitating interference. Regard being had to the materials on record, this court is not inclined to interfere with the impugned order. Thus finding no merit in the case, the rule is discharged. There will be no order as to costs.