COMMISSIONER OF WEALTH TAX, GUJARAT versus VIMLABEN VADILAL MEHTA

Citation: [1984] 1 S.C.R. 480 · Decided: 21-10-1983 · Supreme Court of India · Bench: R.S. PATHAK · Disposal: Dismissed

Judgment (excerpt)

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COMMI~SIONER OF WEALTH TAX, GUJARAT· 
Y. 
VIMLABEN. VADILAL MEHTA 
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October RI, 1983 
.[R.S. PATH~ AND E.S, VENKATARAMIAH, JJ.) 
Wealfh Tax Act-Computation of assessee's net wealth-Whether income 
tax or wealth tax liability created in consequence of.rectification orders' passed 
after the relevant valuation date can be the subject of a claim to deduction ? 
During the collrse of the heari~g of an appeal against an assessment 
order made under the Wealth Tax Act for the aSsessment year 1964-65 · the 
respondent who was the ass~ssee: claimed deduction ·or ·an amount in the ~on1~ 
putation of net wealth which inter alia included the income tax and wealth tax 
liabilities Created in consequence of certain rectific8:tion orders made under 
s. 154 of the~Income-J'ax Act ands. 35 of the Wealth Tax Act. The rectificatjon 
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orders related to assessment·ofincome 'tax/wealth tax for the previous years 
and had been made after the completion of the assessment proceedingS · under 
the Wealth Tax Act for the assessment year 1964-65. 
The deduction claimed 
was allowed by the ApPellate Assistant Commissioner and his decision was 
upheld by the AppeHate Tribuaal aad the High Court. 
Dismissing the api)eal, · 
HELD: . The rectification of an assessment ritU.st be treated on the same 
basis as an origiµal assessment for_thc pilrpose ofa claim to deducti'?D in .the 
computation of the assessee's net wealth. The rec_tification merely quantifies the 
true tax liability which had already been crystallised and become a debt on the 
last day of the PJevious year in U1e case of income tax liability, and, on the 
valuation date in the case of a wealth tax. liability. [484 C-D) 
Commissioner of Wealth Tax, Gujarat v. Shri Vadilal IA//ubhai (C.A, Nos.• 
1524 to 1527 of 1973 de~ided on 21.10.1983) referred. to. 
When aD appeai is filed against an assessment order before the .Appeitate 
Assistant Commissioner, the asses&nent case is ~brown open and the appellate 
proceeding co.nstitutes a continuation of the assessment proceeding. Even if the 
t:ix liabilities, of which a deduction is claimed, are c~eated by rectification order& 
or by assessment orders made after the date of the wealth tax assessment order 
under appeal, the law requires the claim to· deduction being considered On thfl 
saine basis as if it had been made. in the 
ori~iaa1 wealth· tax 
assess~eri: 
procecdin~. [483 :i;-Hl 
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c. w. T. v. v. v. MEHTA (Pathak, J.) 
481 
In the, instant case~ it is ~rue that the rectification orders 
re~ated to tax 
liabilities which were not claimed by the assessee in the course of the original 
assessment proceeding before the Wealth Tax ~ffi.cer but as the Appellate 
Assistant Commissioher permiHed the claim to be made during.the hearing of 
the appeal, there is Do reason .why the assessee should be denied consideration 
\r . of his claim. (483 H; 484 A] 
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CIVIL. APPELJ,ATE JURISDICTION : Civil Ap~al No. 1423 (NT) 
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From the Judgment and Order dated the 13th December, 1972 · 
of the Gujarat High Court at Ahmedabad in Wealth '.fax Reference 
No. 21 of 1971. 
S.C. Manchanda, 
• appellant. 
H.B. Ahuja and Miss A. Subhashini for the 
The Judgln~nt of the Court was delivered by 
PATHAK, J : This appeal is directed against the judgment of the 
·Gujarat High Court disposing of a wealth tax reference and answering 
against the Revenu~ the followirtg two questions : 
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"Whether on the facts and in. the Circumstances of 
the case the assessee is entitled ·to the deduction of-
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(i) income tax liabilities for the assessment years 1962"63, 
1963-64 and 1964-65; wealth tax for the assessment 
year 1964-65 and gift tax for the assessment years 
1962·63 to 1964-65 as determined payable on the 
basis of the assessment orders passed after the 
vaiuatio'n date, and · 
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(ii) income ta;( liability for the assessment years 1958·59 
and 1960-61 and wealth tax liability for the ·year 
1961-62 created as a result of rectification orders· 
passed of the relevant valuation date in determiriing 
the vaJne of the net wealth ?" 
In assessment proceedings under the Wealth Tax Act for the assess· 
ment year 1964-65; the respondent assessee claimed' a deduction of 
Rs. 2,42,53Si- in the computation of her net wealth, on .the ground 
that0the amount represented the assessee's tall liabilities for 
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"llliPIUlMB COURT llBPORTS 

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