S A COLACO Vs. SECOND WEALTH TAX OFFICER
LAWS(IT)-1989-12-15
INCOME TAX APPELLATE TRIBUNAL
Decided on December 01,1989

Appellant
VERSUS
Respondents

JUDGEMENT

A.V. Balasubramanyam, Judicial Member - (1.)THESE appeals by various assessees were amalgamated for a common hearing as the issues involved are identical.
(2.)The assessees are S.A. Colaco, C.F. Colaco, K.J.M. Colaco, C. Colaco and E.S. Colaco. They are all partners in the firm by name M/s. E.S. Colaco & Co. The firm owns a coffee estate by name Huigere Estate. The proceedings relate to wealth-tax assessments of these partners relating to 1981-82 and 1982-83 and, in addition, wealth-tax assessment for 1980-81 in the case of K.J.M. Colaco, C. Colaco and E.S. Colaco. The valuation date is the 31st March of the related calendar year.
The interest of the partners of the firm M/s. E.S. Colaco & Co. was evaluated bearing in mind the Circular of the Central Board of Direct Taxes No. 357, dated 26-3-1983, insofar as the coffee garden is concerned. There is no dispute in regard to this. The firm had pooled coffee to the Coffee Board as required under law every year. Coffee points had been declared by the Coffee Board. The Coffee Board was required to make payments which are normally called 'dividends' in respect of the coffee pooled by the grower. Dividend will not be declared at one stage and it will be spread over in three or four years depending upon several factors. So far as the dividend declared by the Coffee Board prior to the relevant valuation date, the same had reflected in the balance-sheet of the firm. Consequently, that had gone into making of the total taxable wealth.

(3.)COFFEE Board was likely to declare dividends after the valuation date in respect of the coffee pooled before the valuation date. In respect of that the Wealth-tax Officer made an addition. He valued the coffee pool dividend receivable by the assessees and which had not appeared in the balance-sheet. It is a fact that the assessees had not included the value of the coffee points in so far as the dividends which were to be declared after the relevant valuation date. According to the partners, it was not an assessable wealth at all since COFFEE Board had not declared any dividend and there was no certainty about any further dividend being declared. It so happend that COFFEE Board had in fact declared some dividends after the valuation date in respect of the coffee pooled before the valuation date. The actual amount, it was submitted, declared after the valuation date was taken as the market value of the coffee points and the same was added to the net wealth. It is here that the controversy has arisen.


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