MIRJI A T Vs. COMMISSIONER OF WEALTH TAX

JUDGEMENT

(1.) THE Income-tax Appellate Tribunal, Bangalore Bench, has referred the following two questions for the opinion of this court under s. 27(1) of the Wealth-tax Act, 1957 (hereinafter referred to as "the Act");

(2.) WHETHER, on the facts and in the circumstances of the case, the notional income-tax liability on the bills receivable as on the valuation date is deductible under section 2(m) of the Wealth-tax Act in arriving at the net wealth of the assessee ?"

(3.) SECTION 3 of the Act provides that for every assessment year commencing on and from the first day of April, 1957, wealth-tax is leviable on the net wealth of an individual or an undivided family or a company as on the valuation date. SECTION 4 provides as to what are the assets which should be considered as belonging to an individual as on the date of valuation. The word "asset" is defined in s. 2(e) of the Act. According to the said definition, the word "asset" used in the Act includes all property of every description, movable or immovable, except to the extent of the assets specifically excluded by the definition with which we are not concerned. On the basis of the definition, it was contended for the Commissioner that the amounts representing the bills outstanding to the assessee as on the date of valuation constituted the debt due to the assessee and consequently it should be regarded as assets belonging to the assessee as on the date of valuation and, therefore, liable to tax under the Act. However, it was contended for the assessee that the amounts representing the bills outstanding cannot be considered as debt due to the assessee as the bills had not been accepted by his clients. The alternative submission made for the assessee was that as he had maintained his accounts on cash basis and as admittedly the assessee had not received any cash towards those bills as on the date of valuation, the same could not be treated as asset and could not be taxed under the Act.