COMMISSIONER OF WEALTH-TAX vs. SHANTABEN J PATEL

PDF · subscribers

WTR/102/1995HC GujaratGJHC24022784199517 July 2006Author: HONOURABLE MR. JUSTICE M.R. SHAH,HONOURABLE MR. JUSTICE R.S.GARG3 pages

AI SummaryRemanded

What did the High Court hold?

The High Court of Gujarat, per R.S. Garg and M.R. Shah, JJ., answered the reference in favour of the Revenue. The Court noted that in a similar case, WTR No. 60 of 1995, it had taken the view that while the Tribunal was justified in relying on the judgment in CIT v. Ashok Parikh (129 ITR 46), a subsequent Supreme Court judgment in CIT v. Bharat Hari Singhania (207 ITR 1) impliedly overruled the High Court's earlier view. Consequently, the Tribunal's judgment was also considered to be bad. The Court did not delve into further details as the assessee was the same. The matter was remanded to the Income-tax Appellate Tribunal for a fresh decision in light of the Supreme Court's judgment in Bharat Hari Singhania. The reference was disposed of with this direction.

What were the facts?

This case concerns a Wealth Tax Reference filed by the Commissioner of Wealth-Tax (Revenue) against Shantaben J Patel (assessee). The Income-tax Appellate Tribunal had referred a question of law to the Gujarat High Court. The core issue revolved around the valuation of unquoted shares of private limited companies. Specifically, the Tribunal had directed the Wealth-tax Officer (WTO) to value these shares by holding that advance tax paid under the Income Tax Act, shown on the asset side of the companies' balance sheets, could not be deducted from the tax payable when determining if the provision for taxation was in excess of the tax payable with reference to book profit, as per Rule 1D(ii) of the Wealth Tax Rules, 1957. The respondent assessee was served but did not appear.

What were the issues?

1. Whether the appellate Tribunal is right in law and on facts in directing the WTO to value the unquoted shares of private limited companies by holding that the advance tax paid under the Income Tax Act, 1961 and shown on the asset side of the balance sheet of the said companies cannot be deducted from the tax payable, in determining whether the provision for taxation is in excess over the tax payable with reference to the book profit in accordance with the law applicable thereto, within the meaning of clause (ii) of Explanation 2 to Rule 1D of the Wealth Tax Rules, 1957? Assessee's Contentions: The judgment does not record any specific contentions made by the assessee. The assessee did not appear before the High Court. Revenue's Contentions: The Revenue, through its counsel Mr. M.R. Bhatt, presented the question to the High Court. The Revenue's implicit contention, as evidenced by the question posed and the subsequent ruling, was that the Tribunal's direction regarding the deduction of advance tax was incorrect.

Which sections of the Income-tax Act were involved?

Rule 1D

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances

WTR/102/1995 1/3 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD WEALTH TAX REFERENCE No. 102 of 1995 For Approval and Signature: HONOURABLE MR.JUSTICE R.S.GARG HONOURABLE MR.JUSTICE M.R. SHAH ========================================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ========================================================= COMMISSIONER OF WEALTH-TAX - Applicant(s) Versus SHANTABEN J PATEL - Respondent(s) ========================================================= Appearance : MR MANISH R BHATT for Applicant(s) : 1, None for Respondent(s) : 1, ========================================================= CORAM : HONOURABLE MR.JUSTICE R.S.GARG and HONOURABLE MR.JUSTICE M.R. SHAH Date : 17/07/2006

ORAL JUDGMENT (Per : HONOURABLE MR.JUSTICE R.S.GARG)

WTR/102/1995 2/3 JUDGMENT

Mr. M.R. Bhatt, learned counsel for the Revenue, none for the respondent, office report shows that the respondent is served.

Income-tax Appellate Tribunal, at the instance of the Revenue has referred the following question to this Court for its answer. “Whether, the appellate Tribunal is right in law and on facts in directing the WTO to value the unquoted shares of private limited companies by holding that the advance tax paid under the Income Tax Act, 1961 and shown on the asset side of the balance sheet of the said companies cannot be deducted from the tax payable, in determining whether the provision for taxation is in excess over the tax payable with reference to the book profit in accordance with the law applicable thereto, within the meaning of clause [ii][3] of Explanation 2 to Rule 1D of the Wealth Tax Rules, 1957?”

In WTR No. 60 of 1995, we have taken the view that the Tribunal was, though justified in placing reliance upon the judgment in the matter of CIT v. Ashok Parikh, reported in 129 ITR 46, but in view of the subsequent judgment of the Supreme Court in the matter of CIT v. Bharat Hari Singhania, reported in 207 ITR 1, the view taken by this Court stands impliedly overruled and consequently, the judgment passed by the Tribunal would also become bad.

As the assessee is the same, without entering

WTR/102/1995 3/3 JUDGMENT into further details, we hereby answer the question in favour of the Revenue but with further direction that the matter would stand remanded to the Income-tax Appellate Tribunal for its decision afresh in light of the judgment of the Supreme Court in the matter of Bharat Hari Singhania [supra]. The Reference is answered in favour of the Revenue, but with above-referred further direction. The Reference stands disposed of. [R.S. GARG, J.] [M.R. SHAH, J.] pirzada/-

Recent GST High Court judgments

Search GST case law →