1993 PLP 664 (PTD)
COMMISSIONER OF WEALTH TAX Versus V.M. SHAH
| Citation | 1993 PLP 664 (PTD) |
| Forum / Court | Bombay High Court (India) |
| Bench Members | Mrs. Sujata V. Manohar and T.D. Sugla, JJ |
| Parties | COMMISSIONER OF WEALTH TAX Versus V.M. SHAH |
| Primary Law | (a) Wealth tax, (d) Wealth tax, (c) Wealth tax |
Q1: What are the key laws and sections cited in 1993 PLP 664 (PTD)?
This judgment primarily cites: (a) Wealth tax, (d) Wealth tax, (c) Wealth tax, (b) Wealth tax as referenced in Pakistani case law index.
Q2: Which judicial bench decided the case 1993 PLP 664 (PTD)?
The case was heard and decided by the Bombay High Court (India) bench comprising: Mrs. Sujata V. Manohar and T.D. Sugla, JJ.
Q3: What is the official citation format for this judgment on Pakistan Law Portal?
Cite this legal precedent as: 1993 PLP 664 (PTD) (COMMISSIONER OF WEALTH TAX Versus V.M. SHAH). Read the full summary and cross-referenced laws free on Pakistan Law Portal.
Laws Cited
Headnotes / Summary
Accounting
Cash system of accounting
Income Tax liability on outstanding professional fees
Not an accrued liability
Wealth Tax Act, 1957.
Assessee carrying on profession
Adjustment in terms of S.7(2)(a) can be made to the balance-sheet
Rule 2(c) or Wealth Tax Rules, 1957, applicable
Adjustment which has the effect of substituting the mercantile system of accounting for the cash system of accounting can be made
Wealth Tax Act, 1957, S.7(2)(a)
Wealth Tax Rules, 1957, R.2(c).
Outstanding fees of firm adjusted in balance-sheet of firm
Outstanding liabilities of firm should also be adjusted on accrual basis-- Wealth Tax Act, 1957.
Net wealth
Assessee's share of outstanding fees of firm
Includible in net wealth. CWT v. V.M. Shah (1988) 170 ITR 17 (Bom); CWT v. Vasantlal D. Mehta (1990) 186 ITR 284 (Bom.) and CWT v. KT. Divecha (1990) 186 ITR 310 (Bom.) fol. G.S. Jetley, with Miss Manjula Singh and K.C. Sidhwa for the Commissioner. S.J. Mehta with I.M. Munim for the Assessee.
Judgment & Decree
Net wealth
Assessee's share of outstanding fees of firm
Includible in net wealth. CWT v. V.M. Shah (1988) 170 ITR 17 (Bom); CWT v. Vasantlal D. Mehta (1990) 186 ITR 284 (Bom.) and CWT v. KT. Divecha (1990) 186 ITR 310 (Bom.) fol. G.S. Jetley, with Miss Manjula Singh and K.C. Sidhwa for the Commissioner. S.J. Mehta with I.M. Munim for the Assessee. MRS. SUJATA V. MANOHAR, J: --The following five questions have been referred to us under section 27(1) of the Wealth Tax Act, 1957: "(1) Whether the adjustments prescribed in terms of section 7(2)(a) of the Wealth Tax Act can be made to the balance-sheet in the case of an assessee who is carrying on a profession? (2) Whether, on the facts, rule 2-C of the Wealth Tax Rules is applicable in this case? (3) If the answer to question No.(2) is in the affirmative, whether it is permissible to make an adjustment which has the effect of substituting the mercantile system of accounting for the cash system of accounting? (4) If the outstanding fees of the firm are to be adjusted in the balance sheet of the firm, whether outstanding liabilities of the firm should also be adjusted in the balance-sheet on accrual basis? (5) Whether, on the facts and the circumstances of the case, the Tribunal rightly excluded from the net wealth of the assessee, the assessee's share of the outstanding fees of the firm of M/s. C.M. Shah & Co., Chartered Accountants, estimated at Rs.75,000?" It is accepted by both the sides that the decision in the case of CWT v. V.M. Shah (1988) 170 ITR 17 (Bom) governs this case as also our decisions in Wealth Tax Reference No.168 of 1976 (CWT v. Vasantlal D. Mehta (1990) 186 ITR 284) alongwith Wealth Tax Reference No.92 of 1975 (CWT v. KT. Divecha (1990) 186 ITR 310 delivered by us on June 11, 1990. We would like to clarify that income tax liability on outstanding fees cannot be considered as an accrued liability in a case where the professional has kept his accounts on cash basis for the purpose of income-tax as set out in our above judgment. The questions are, accordingly, answered as follows: Questions Nos. 1, 2 and 3 in the affirmative and in favour of the Revenue. Question No.4 in the affirmative and in favour of the assessee. Question No.5 in the negative and in favour of the Revenue. No order as to costs. M.BA./2103/T Question answered.