Decided on December 05,1994



S.BANDYOPADHYAY, A. M. : - (1.) THE Issue involved in both these appeals is the same. Hence, the appeals have been consolidated and a common order is being passed for the sake of convenience.
(2.) In these two WT assessments, the Assessing Officer (AO) had taken into consideration the excess of advance tax paid over the income-tax liabilities as per the return, as an asset by way of income-tax refund due to the assessees. In the respective appeals, the CWT(A), mainly basing on the decision of the Gujarat High Court in the case of CWT vs. Arvindbhai Chinubhai (1982) 133 ITR 800 (Guj), came to the conclusion that income-tax refunds, as long as they were not determined and ordered to be paid by the AO could not be considered as having the characteristic of an asset. In that view he deleted the inclusion of these amounts within the total wealth of the assessees. The Department has come up in further appeals against the said decision of the CWT(A). The Departmental Representative relies strongly on the decision of the Madras High Court in the case of T. V. Srinivasan vs. CWT (1985) 152 ITR 599 (Mad) at page 601 in which it has been held that having regard to the statutory provisions which compel an assessee to pay advance tax and make the non-payment of advance tax penal, the amount of advance tax or excess advance tax paid in pursuance of a statutory compulsion cannot be taken to be a deposit. The entire advance tax paid will be an asset of the assessee and the entire accrued income-tax liability for the relevant accounting year will be a debt owed by the assessee to the Government with the result that the excess advance tax will continue to have the character of an asset of the assessee. In arriving at the above conclusion, the Madras High Court dissented from the abovementioned decision of the Gujarat High Court in the case of Arvindbhai Chinubhai (supra).
(3.) THE learned counsel for the assessees, on the other hand, strongly relied on the above mentioned decision of the Gujarat High Court in the case of Arvind Chinubhai (supra) in which it had been discussed that advance tax is a part and parcel of the income-tax and the consequences of non-payment of advance tax are the same as the consequences of non-payment of tax due after the assessment. It was finally held by the Gujarat High Court that the mere possibility of getting income-tax refund in future as and when the assessment proceedings are to be finalised would not form part of an asset of the assessee belonging to him on the valuation date. Hence, the High Court came to the decision that payment of any advance tax cannot be treated as an asset of the assessee which belongs to him and furthermore that the future possibility of getting refund of the advance tax paid represents a mere chance of getting an asset in future, may be years after the valuation date, when the assessment proceedings under the IT Act would get finalised. THE learned counsel for the assessee also relied on another decision of the Rajasthan High Court in the case of CIT vs. Rangnath Bangur (Decd) (1985) 152 ITR 71 (Raj) in which also exactly a stand, as taken by the Gujarat High Court as above, had been taken. THE representative of the assessee furthermore brought out notice to the case of R. N. Goenka vs. CWT (1989) 176 ITR 129 (Mad) also adjudged by the Madras High Court in which it was held as follow : ".... that there was considerable force in the argument that in T. V. Srinivasan vs. CWT (1985) 152 ITR 599 (Mad), the Division Bench had omitted to consider the vital matter as to how, on the relevant valuation date, the excess advance tax which could be ascertained only after the completion of the assessment which would naturally be only after the relevant valuation date could relate back to the valuation date and such excess tax could be considered to be an asset of the assessee on the date of valuation. This decision required reconsideration. Hence, the question, whether income-tax refunds which became due after the valuation date constituted an asset chargeable to wealth-tax, had to be referred.";

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