Ajit Kumar Sengupta, J. - (1.) In this reference under Section 27(1) of the Wealth-tax Act, 1957, for the assessment year 1978-79, the following two questions have been referred to this court ; "(1) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was correct in directing the Wealth-tax Officer not to allow liability for provision for taxation other than that for the assessment year in computing" the net wealth of the firm in terms of Rules 2 to 2E of the Wealth-tax Rules, 1957, in determining the value of interest of the assessee in the firm relating to the assessment year 1978-79 ? (2) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was correct in holding that, if the amount of provision for taxation was not reduced by the amount of advance tax paid, then the entire amount of Rs. 4,15,000 representing provision for taxation would have to be added to the value of the assets of the firm in determining the value of interest of the assessee in the firm ?"
(2.) The facts are that the Wealth-tax Officer, in his assessment, valued the interest of the assessee in the partnership, Messrs. East Coast Agency, as per computation in annexure "A" assessment order. In that annexure, the Wealth-tax Officer (adjusted) the tax provision by the amount of advance tax appearing (in) the balance-sheet. He proceeded to compute the value of the interest of the assessee accordingly.
(3.) The assessee took up the matter before the Appellate Assistant Commissioner and contended that, according to the rules, adjustment was not necessary and that the provision for taxation was not a contingent liability nor for meeting any future liability. Reference was made to the decision of the Supreme Court of India in the case of Kesoram Industries and Cotton Mills Ltd. v. CWT [1966] 59 ITR 767. He directed the Wealth-tax Officer not to make the adjustment and to compute the value of the interest of the assessee accordingly.;