1. These four appeals though they relate to two assessees, involve a common question and are, therefore, disposed of by this single order.
2. The dispute in these appeals is as to whether the amounts of refunds which were actually granted to the assessees long after the valuation dates could be included in their net wealth. In case of the first assessee, Shri Gokulchand Bangur, the WTO noticed that he had been granted the following refunds:Assessment year Date of completion of Amount of refund assessment determined1964-65 27-2-1968 2,5011965-66 31-7-1968 1,60,8991966-67 30-8-1968 38,9631967-68 2-6-1969 7,648 Similarly, the second assessee, Shri Gobindlal Bangur, was found to have been granted the refunds as given below: The WTO was of the opinion that when the assessees filed the returns, they had themselves claimed refunds of the total amount paid by them as advance tax on income. He, therefore, concluded that since the assessees knew that the income-tax refunds were due to them at the time of filing of returns themselves as they bad returned considerable losses, the amounts actually refunded to them were liable to be included in their net wealth. He, therefore, computed the net wealth after allowing the liabilities of the assessees but added back the refunds granted to the assessee.
3. The assessees went in appeals to the Commissioner (Appeals) and relied upon a decision of the Gujarat High Court in CWT v. Arvindbhai Chinubhai  133 ITR 800 for the proposition that before an asset could be taken into consideration for computing the net wealth of an assessee under Section 2(m) of the Wealth-tax Act, 1957 ('the Act') such asset must belong to the assessee on the relevant valuation date.
The mere possibility of getting income-tax refund in future as and when the assessment proceedings are finalized could not be treated to be an asset of the assessee on the valuation date because at that time it did not belong to him. What the assessee had done on the valuation date was only the discharge of his legal obligation by paying advance tax. He, therefore, deleted the additions on account of refunds granted to the assessee. The revenue has come up in second appeal before us.
4. We have heard the representatives of the parties at length in these appeals. While the Gujarat High Court judgment in Arvindbhai Chinu-bhai's case (supra) is to the effect that the refunds which have not been quantified on the valuation dates, cannot be included in the net wealth of the assessee, because the liability to pay the advance tax was a liability in respect of an existing debt which the assessee had discharged, there are authorities which decide the converse proposition the other way round. In nearly all the decisions on the subject, it has been held that even though the liabilities may not have been quantified on the relevant valuation dates, the assessees are entitled to claim them as a deduction, if not otherwise, specifically debarred by Section 2(m). For example, there is the decision of the Calcutta High Court in CWT v. Bansidhar Poddar  112 ITR 957 in which the assessee had made a voluntary disclosure under Section 68 of the Finance Act, 1965, and paid the tax on 26-5-1965. He claimed deduction from the net wealth for the assessment year 1965-66, the relevant valuation date whereof had already expired before making the disclosure. The High Court held that the disclosure envisaged under Section 68 was in respect of an amount which was already liable to be assessed as income under the relevant Income-tax Act and, therefore, the mere fact that the said amount was neither quantified nor assessed nor even returned on the valuation date was not material. Again, there are the decisions of the Hon'ble Supreme Court of India in CWT v.K.S.N. Bhatt  145 ITR 1, CWT v. Vadilal Lallubhai  145 ITR 7 and CWT v. Vimlaben Vadilal Mehta  145 ITR 11. In all of them it has been held that in computing the net wealth of the assessee for wealth-tax, the liabilities towards income-tax, wealth-tax and gift-tax which crystallised on the relevant valuation dates as determined in respect of their assessment orders would be allowable as a deduction even though these assessment orders are finalised after the valuation dates. The decision of the Gujarat High Court in Arvindbhai Chinubhai's case (supra), relied upon by the Commissioner in principle is, therefore, contrary to these decisions.
5. After carefully considering all the facts and circumstances of the case, we are of the opinion that the department is entitled to succeed in the present appeals. The mere fact that the refund was actually granted to the assessee afier the valuation dates would not be conclusive of the matter because if the liabilities for these years which were discharged after the valuation dates could be allowed as a deduction, there is no reason as to why the amounts of refund which were given on a later date but could be ascertained on the due date in the same manner as liabilities could not be added to the net wealth of the assessees. In CWT v. Shivjibhai Jairam (HUF)  143 ITR 759 (MP) it was held that the right to recover or sue for mesne profits is a claim for unliquidated damages. It is heritable and it is not a right or interest mentioned in the exclusionary clauses of definition of assets in Section 2(e). Although the right is a right in personam, it did crystallise though the quantum thereof was not determined on the said dates. What is most important in this behalf are the observations of the Supreme Court in the case of Vadilal Laliubhai (supra). Their Lordships have observed that in computing the net wealth of the assessee the deduction admissible must be calculated on the basis of tax as finally quantified on the assessment even though the assessment may have been made subsequent to the valuation date. Once an assessment order in relation to a particular tax of which the deduction is allowed is passed, the data disclosed by the assessee in his return are no longer determinative of the assessee's tax liability because in law they stand superseded by the assessment order.
6. Their Lordships have further observed that if the wealth-tax assessment is carried in appeal, the appellate authority has to take into account the ultimate quantification of the tax liability, even though such ultimate quantification has been reached after the relevant valuation and during the pendency of the wealth-tax appeal. What their Lordships, therefore, have held is that it is the ultimate liability determined as a result of the decision of the highest Court that would be allowable as a deduction in computing the net wealth of an assessee, even though the determination may have taken place on a date after the assessment order during the pendency of an appeal. Now, if the ultimate liability so determined is to be considered for the purpose of allowing a deduction, there is apparently no reason why if the liability is reduced or increased, the deduction shall not vary. In the present case, the refunds were determined even before the assessment orders were passed by the WTO. Therefore, apparently there is no reason why they could not be treated as the assets of the assessee in the light of the decisions of the Hon'ble Supreme Court. We, therefore, are of the opinion that the Commissioner (Appeals) was wrong in law in excluding the amounts actually found due to the assessee subsequent to the valuation dates but relating to earlier years. We, accordingly, accept these appeals, set aside the orders of the Commissioner (Appeals) and restore those of the WTO.6. I agree with the conclusion and reasoning of my learned brother. In addition to what has been said by my learned brother, I will like to make the following observations.
7. Section 3 of the Act subjects the 'net wealth' of an assessee on the given valuation date to the charge of wealth-tax. The term 'net wealth' has been defined in Clause (m) of Section 2 of the said Act. According to it, simply stated, net wealth is the excess of the aggregate value of all the assets of an assessee over the aggregate value of all the debts owed by the assessee on the valuation date. The liability to pay income-tax on the total income of an assessee arises on the last day of the accounting period, which is also the valuation date, and is deductible while computing the asseesee's net wealth--Kesoram Industries & Cotton Mills Ltd. v. CWT  59 ITR 767 (SC) and also H.H. Setu Parvati Bayi v. CWT  69 ITR 864 (SC). The quantification of the said debt does take place after the valuation date but this quantum is in respect of the debt which existed on the valuation date and so relates back to the valuation date, irrespective of the date when it is quantified. If, however, such assessments have not been finalized on the date when the wealth-tax assessment is completed, the liability to income-tax has to be computed on the basis of the return filed and the rates of tax stipulated in the relevant Finance Act. But if the income-tax assessments, in question, have already been completed, the tax quantified through such assessment orders would be the debt. This logic has been carried a step further by their Lordships of the Hon'ble Supreme Court in the cases of Vadilal Lallubhai (supra), Vimlaben Vadilal Mehta (supra) and K.S.N. Bhatt (supra). According, to these judgments, the income-tax liability determined on completion of the assessments must be substituted for the estimated tax liability on the valuation date, even if the final tax liability to income-tax was determined after the completion of wealth-tax assessments but during the pendency of appellate proceedings, at whatever stage the appeal in question might be pending, i.e., whether before the first appellate authority or the second appellate authority or even under reference.
8. Now the liability to pay income-tax is one single point liability created by Section 4 of the Income-tax Act, 1961. The liability to pay tax by deduction at source or to pay it in advance is not a separate liability, distinct from the liability to pay income-tax. Tax deduction at source and advance payment of tax are merely the modes of collecting income-tax charged by Section 4(1). This position is made clear by a combined reading of Sub-sections (1) and (2) of Section 4, above referred. Sub-section (1) provides, inter alia, that 'income-tax...
shall be charged ... in respect of the total income of the previous year ... of every person.' Sub-section (2), then, stipulates that:-- In respect of income chargeable under Sub-section (1), income-tax shall be deducted at the source or paid in advance, where it is so deductible or payable under any provision of this Act." 9. The provisions, referred to above, are contained in Chapter XVII of the 1961 Act having the title as 'Collection and Recovery of tax'. The Chapter is divided into four parts. Part A deals with general provisions.
Section 190 of the 1961 Act, falling in this part, is clarificatory in nature and underscores the point that this Chapter does not create independent liability to pay income-tax de hors the charge created by Section 4(1). It reads as follows: 190.(1) Notwithstanding that the regular assessment in respect of any income is to be made in a later assessment year, the tax on such income shall be payable by deduction at source or by advance payment, as the case may be, in accordance with the provisions of this Chapter.
(2) Nothing in this section shall prejudice the charge of tax on such income under the provisions of Sub-section (1) of Section 4.
Part B deals with 'Deduction at source' and Part C deals with 'Advance payment of tax'. Section 202 of the 1961 Act clarifies that deduction of tax at source is 'only one mode of recovery'. Section 199 of the 1961 Act stipulates that credit for tax deducted at source will be given in the assessment of the person from whose income the tax has been so deducted. Similar provision is contained in Section 219 of the 1961 Act with regard to the tax paid in advance. It states, inter alia: Any sum, ... paid by or recovered from an assessee as advance tax ... shall be treated as a payment of tax in respect of the income of the period which would be the previous year for an assessment for the assessment year next following the financial year in which it was payable and credit therefor shall be given to the assessee in the regular assessment." 10. The nature of these payments, as also their demand, is that of 'on account' payments, which have to be finally adjusted against the 'debt' of tax created by Section 4(1). When such debt is quantified by regular assessment, the tax paid/recovered through the above two modes, inter alia, is adjusted against the demand and if the demand is more, the additional tax is asked for and if the demand is less than the tax already paid/recovered, the excess so paid or recovered has to be refunded. The claim for refund of tax on account of the excess payment/recovery through the two modes of collection of tax, referred to above, is, thus, directly related to the demand of tax under Section 4(1). If this demand accrues or arises on the last day of the accounting year (or on the valuation date), the claim for refund will, ipso facto, arise on this date. The quantum of claim may not have crystallised as on the above date for it depends on the framing of assessment but, to use the words of their Lordships of the Hon'ble Supreme Court, in the case of Kesoram Industries & Cotton Mills Ltd. (supra), there is a 'perfected debt at any rate' on the last day of the accounting year in respect of this refund in favour of the assessee. It is only the reverse of the same coin. Income-tax, whenever quantified, is the debt due from the assessee on the valuation date; by necessary implication, the excess payment over the tax due is the debt due from the Government to the assessee on the valuation date.
11. The excess payment of tax, if any, can be estimated with reasonable accuracy in the same manner as the tax and as explained by their Lordships of the Hon'ble Supreme Court in Kesoram Industries & Cotton Mills Ltd.'s case (supra) and H.H. Setu Parvati Bayi's case (supra). It is also not as if one need wait for refund of excess payment till the finalisation of assessment. Section 141A of the 1961 Act provides for 'Provisional assessment of refund', if there is no reasonable prospect of the regular assessment being completed within six months from the date of the filing of the return. This provision is in accordance with the formulation enunciated in Kesoram Industries & Cotton Mills Ltd.'s case (supra) and H.H. Setu Parvati Bayi's case (supra) by their Lordships of the Hon'ble Supreme Court.
12. It is true that the advance tax demanded of an assessee under Section 210 or estimated by him as payable under Section 212 of the 1961 Act, etc., is liable to be paid as if it is regular tax demanded but the nature of this payment cannot be lost sight of namely, that it is an on account payment and the quantum of the excess payment, if any (i.e., refund), will be determinable on the same date on which the debt on account of which it was paid.
13. For the reasons given above, I hold, as my learned brother did, that the refunds due to the assessee on account of excess payments of income-tax in respect of dates falling before the valuation dates in question will be includible in the assessee's total wealth.