N.P. Singh vs Commissioner of Income Tax, Wealth Tax. B and O.

This reference is u/s 27(1) of the Wealth Tax Act The year of assessment related to this reference is 1959-60 and the valuation date connected therewith is the 31st March 1959 The assessee held 9700 sharei of Messrs. Singh and Chanchani Private, Ltd. The Wealth Tax Officer calculated the value of those shares and assessed in that respect, without making any deduction on account of the provision made by the Company for payment of Income Tax The shares were valued at Rs. 18 79 each The assessee''s contention was and is that, in assessing the value of the assets in respect of the shares the deduction on ac-count of the provision made for payment of Income Tax for the relevant year should be made One of the questions formulated in this reference is.

"On the facts and circumstances of this case was the Tribunal justified in holding that the provision for taxation made in the Balance sheet of the company was not deductible in computing the break-up value of the shares of Singh and Chanchani P. Ltd..?"

The Tribunal was in agreement with the member of the computation of the value of the assets as done by the Wealth Tax Officer Now the question is beyond any controversy in view of the decision of the Supreme Court in the case of Kesoram Industries and Cotton Mills Ltd. Vs. Commissioner of Wealth Tax, (Central) Calcutta, . The deduction in respect of the provision of income tax was held to be taken into account for the purpose of assessment of the value of the shares held in the companies. That was followed by this Court in Misc Judicial Case No. 288 of 1961 (disposed of on the 20th December 1965. The Commissioner of Wealth Tax Vs. Sahu Jain Ltd., by a Full Bench Our answer therefore to that question is that the provision made for the payment of income tax in the balance-sheet of the company will have to be deducted in computing the break-up value of the shares of Singh and Chanchani Private Limited for the relevant year.

The other question is whether the charge of wealth tax u/s 3 of the Wealth Tax Act on Hindu undivided families is ultra vires the Constitution and as such, the assessment of the assessee Hindu undivided family of Wealth Tax was bad in law The assessee claimed to be a Hindu undivided family: but this question has been settled by the Supreme Court in the case of Seth Banarsi Das etc. Vs. Wealth Tax Officer, Special Circle Meerut, etc., . A Hindu undivided family is a body of individuals who are amenable to the application of the charging section, namely, Section 3 of the Wealth Tax Act. This question is, accordingly, answered.

In the circumstances of the case and in view of the partial success of both the parties, there will be no order for costs.