DWARKA NATH Vs. COMMISSIONER OF WEALTH TAX

JUDGEMENT

(1.) THIS is a case referred by the Income-tax Appellate Tribunal, Delhi Bench A, under section 27(1) of the Wealth-tax Act, 1957, the question framed by the Tribunal being :

(2.) THE assessee is a Hindu undivided family and the question is of its assessment to wealth-tax for the assessment year 1959-60. THE previous year selected by it is the Diwali year, for the assessment year 1959-60, which ended on November 8, 1958. THE assessee had invested 3 lakhs of rupees in a certain firm. On November 8, 1958, the last day of the previous year, the investment of rupees 3 lakhs was distributed among the various coparceners by necessary entries being made in the accounts. THE result was that the assessee could not be said to possess the amount of rupees 3 lakhs on November 8, 1958. In assessing the wealth-tax, the Wealth-tax Officer, the Appellate Assistant Commissioner of Wealth-tax and the Income-tax Appellate Tribunal included the amount of rupees 3 lakhs in the net wealth of the assessee for assessment purposes. THE case of the assessee was that since the amount of rupees 3 lakhs had been partitioned among the coparceners, it ceased to be its wealth and could not be included in its net wealth. This claim was rejected by the wealth-tax authorities and also the Tribunal on the ground that at the first moment of November 8, 1958, the assessee possessed this amount of Rs. 3 lakhs and was, consequently, liable to pay wealth-tax on it.

(3.) AS it seems not to be in doubt that any asset acquired on the valuation date is to be included in the assets for calculating the net wealth, it means that if an asset changes hands twice or thrice on the valuation date, its value will be included in the net wealth of two or three assessees. This would be anomalous, the same asset being taken into account in the computation of the net wealth of two or three assessees. This anomaly can be avoided only by holding that the net wealth at the last moment of the valuation date is to be assessed.