WEALTH-TAX OFFICER v. S.K. GUPTA
[Citation -1986-LL-1125-4]

Citation 1986-LL-1125-4
Appellant Name WEALTH-TAX OFFICER
Respondent Name S.K. GUPTA
Court ITAT
Relevant Act Wealth-tax
Date of Order 25/11/1986
Assessment Year 1982-83
Judgment View Judgment
Keyword Tags wealth-tax assessment • deemed dividend • valuation date • memo of appeal • deemed income • net wealth
Bot Summary: The assessee claimed before the WTO deduction in respect of a loan of Rs. 91,000 taken by him from M/s. S.K. Gupta Pvt. Ltd. The assessee was the director of the said company and as such, that loan given by the said company to the assessee was treated as deemed dividend in the hands of the assessee in the income-tax proceedings. The WTO rejected the claim for deduction in the wealth-tax assessment proceedings on the ground that the said amount had been treated as deemed income in the hands of the assessee. In the appeal filed by the assessee the CWT(A) observed that the said amount did not ceases to be a liability of the assessee and as such, deduction was allowable. 2(m) of the WT Act, 1957 defines net wealth as the amount by which the aggregate value of assets computed in accordance with the provisions of the Act of all the assets belonging to the assessee on the valuation date is in excess of the aggregate value of all the debts owed by the assessee on the valuation date. The question which requires investigation for wealth-tax purposes is whether a particular amount represents a debt owed by the assessee on the valuation date and if so, whether the said debt was other than the debts mentioned in sub-cls. In the present case the amount in question undoubtedly represented debt owed by the assessee on the valuation date although the payment was required to be made in future. We, accordingly, hold that the said amount represented deductible debt or computing the net wealth under s. 2(m) of the WT Act, 1957.


R.L. SANGANI, J.M. This appeal by Department relates to asst. yr. 1982-83 for which relevant valuation date was 31st March, 1982. assessee claimed before WTO deduction in respect of loan of Rs. 91,000 taken by him from M/s. S.K. Gupta Pvt. Ltd. assessee was director of said company and as such, that loan given by said company to assessee was treated as deemed dividend in hands of assessee in income-tax proceedings. WTO rejected claim for deduction in wealth-tax assessment proceedings on ground that said amount had been treated as deemed income in hands of assessee. In appeal filed by assessee CWT(A) observed that said amount did not ceases to be liability of assessee and as such, deduction was allowable. He directed WTO to allow deduction. Department is now in appeal before us and ground raised in memo of appeal is that ld. CWT (A) had erred in directing WTO to allow sum of Rs. 91,000 as liability in spite of fact that said amount came in category of deemed dividend and was included in total income of assessee. We have heard parties. Sec. 2(m) of WT Act, 1957 defines net wealth as amount by which aggregate value of assets computed in accordance with provisions of Act of all assets belonging to assessee on valuation date is in excess of aggregate value of all debts owed by assessee on valuation date. Under this provision all debts owed by assessee are to be deducted from value of assets. debts which are not liable to be deducted are mentioned in sub-cls. (i), (ii) and (iii) of that clause. question, therefore, which requires investigation for wealth-tax purposes is whether particular amount represents debt owed by assessee on valuation date and if so, whether said debt was other than debts mentioned in sub-cls. (i), (ii), (iii). If concerned debt does not fall under any of those three sub-clauses, deduction is bound to be allowed. N o other consideration would then arise. In present case amount in question undoubtedly represented debt owed by assessee on valuation date although payment was required to be made in future. said debt did not come under any of three sub-clauses of cl. (m) of s. (2). Consequently, that debt was liable to be deducted. fact that said amount came in category of deemed dividend under s. 2 (22) of IT Act, 1961, was wholly irrelevant for determining question whether said amount represented deductible debt under s. 2(m) of WT Act, 1957. In order to determine question whether said debt was deductible under s. 2 (m) of WT Act, 1957, we have to look to provisions of said clause only. provisions of IT Act would be irrelevant for that purpose. We, accordingly, hold that said amount represented deductible debt or computing net wealth under s. 2(m) of WT Act, 1957. We, accordingly confirm order of CWT(A). appeal is dismissed. *** WEALTH-TAX OFFICER v. S.K. GUPTA
Report Error