1. At the instance of the CWT, Gujarat-III, Ahmedabad, two questions of law have been referred for our opinion under s. 27(1) of the W. T. Act, 1957, and they read as under :
'(1) Whether the Tribunal was right in law in holding that the amount of Rs. 76,857 representing income-tax refund due to the assessee did not form a part of his taxable asset under section 2(e) of the wealth-tax Act, 1957, on the valuation date
(2) Whether, on the facts and in the circumstances of the case, the Tribunal was right is law in holding that for the purpose of computation of the market value of the shares of Bipin Silk Mills (P.) Ltd., the advance tax paid under section 210 of the Income-tax Act, 1961, and shown on the assets side of the balance-sheet of the said company cannot be deducted from the tax payable in determining whether the provision for taxation is in excess over the tax payable with reference to the book profits in accordance with the law applicable thereto within the meaning of clause (ii) (e) of Explanation II to rule 1D of the Wealth-Tax Rules, 1957 ?'
2. So far as question No. 1 is concerned both the learned advocates of the respective sides are agreed that it requires to be reframed to highlight the real question in controversy. We have accordingly, reframed the question as under :
'Whether the Tribunal was right in law in holding that the amount of Rs. 76,857 representing income-tax refund likely to be due to the assessee on the basis of the returns filed by the assessee, did not form a part of his taxable asset under section 2(e) of the Wealth-tax Act, 1957, on the valuation date ?'
3. Now, to look a few relevant leading to the present proceedings. The assessee is an individual. the relevant assessment year is 1970-71 and the valuation date is 31st March, 1970. The assessee held 137 shares in Bipin Silk Mills (P.) Ltd. The shares of the said company were not quoted on the stock exchange. The assessee valued the shares at Rs. 2,500 per share for the assessment year in question. The WTO valued the same at Rs. 5,486.51 per share. The said value was arrived at by the following method prescribed by r. 1D of the W. T. Rules. The WTO included a sum of Rs. 76,857 representing income-tax refund due as taxable asset of the assessee on the valuation date. So far as the aforesaid amount of Rs. 76,857 is concerned, it break up reads as under :
Rs.18,306 being the excess liability of income-tax paidover the income-tax liability for A.Y. 1967-6840,988 being the excess of income-tax paid over theincome-tax liability for A.Y. 1969-70.17,563 being the excess income-tax paid over theincome-tax liability for A.Y. 1970-71.---------76,857
4. According to the WTO, this amount represented an asset of the assessee within the meaning of s. 2(e) of the W. Y. Act and was liable to be included as part of his assets as on the valuation date.
5. The assessee challenged the aforesaid assessment order of the WTO before the AAC. The assessee contended that the valuation adopted by the WTO was not proper so far as the 136 unquoted equity shares were concerned; that the better method, according to the assessee, would be the yield method. On the question of inclusion of Rs. 76,857, it was contended by the assessee before the appellate authority that it was not an asset. The AAC accepted both the aforesaid contentions raised on behalf of the assessee and held that so far as valuation of the shares of Bipin Silk Mills was concerned, the same should be determined according to the yield method. On the question of inclusion of Rs. 76,857 as an asset of the assessee, the AAC held that the refund due not form part of the taxable wealth of the assessee.
6. That resulted in an appeal by the revenue before the Income-tax Tribunal at Ahmedabad Bench `B'. following the view of the Income-tax Appellate Tribunal, Ahmedabad Bench `A', in W. T. A. Nos. 17 and 18 (Ahd) /72-73, the Tribunal reversed the order of the AAC on the question of valuation of shares and directed the WTO to follow the provision of r. 1D and redetermine the value of the shares of the assessee. The assessee had also filed cross-objections before the Tribunal contending that if it is held that valuation of the shares of the assessee in respect of the shares in Bipin Silk Mills (p.) Ltd. was to be made as per r. 1D of the W. T. Rules, 1957, then the advance tax paid and shown as an asset in the balance-sheet should not be treated as an asset in the balance-sheet should not be treated as an asset and the provision for taxation in the balance-sheet should be treated as a liability in computing the value of equity shares of the said company on the valuation date. Since the Tribunal held that the valuation shall be fixed after following r. 1D, it is also held that the valuation as worked out under r. 1D should be adjusted so as to exclude advance tax paid from the assets of the company and at the same time the WTO may consider whether the provision for taxation if any, is in excess of the tax payable with reference to the book profits but without making any adjustment in advance tax paid, if the advance tax paid is shown not as deduction from the provision for taxation as an asset. Thus, the Tribunal accepted the contention raised by the assessee in his cross-objections. It is, thereafter, that the revenue sought a reference on two questions of law for the opinion of this court, under s. 27(1) of the W. T. Act, and accordingly, these two questions came to be referred to us by the Tribunal at its balance.
7. As stated above, we have reframed question No. 1 for our consideration we now proceed to deal with the merits of the referred questions.
8. So far as question No. 1 as reframed is concerned, the aforesaid facts show that the assessee during the relevant assessment years had paid certain amount of advance income-tax. The assessment proceedings regarding the income-tax liability of the assessee for the concerned years were pending on the valuation date. Thus, it was known as to whether any refund was at all likely to be available to the assessee from the income-tax paid for the concerned years nor was it known as to what would be the actual amount of such refund which might accure to the assessee. It is against the background of these facts that questions No. 1 as reframed has to be answered. It is now well settled that advance tax is also a part and parcel of the income-tax and consequences of non-payment of advance tax are the same as consequences of non-payment of tax due after assessment. In Swastik Engineering works v. CIT  87 ITR 116, a question had arisen for consideration of this court as to whether the assessee was liable to penalty under s. 221 of the I. T. Act if he had not paid advance tax. It was the contention of the assessee that so long as tax is not finally determined by the department after proper assessment by the ITO, penalty proceedings under s. 221 could not be invoked by the revenue. Rejecting the said contention of the assessee, it was held by this court that advance tax should be treated as a tax for the purpose of applying the provisions of s. 221 of the I. T. Act, 1961, and the penalty contemplated by s. 221 of the Act can be levied in the case of the default made by the assessee in the payment of advance tax demanded under s. 210 of the Act. It was further held that if the assessee fails to make a payment of advance tax on the specified date, he would be in default and so long as this liability is not discharged, the default would continue to subsist within the meaning of s. 22 of the Act even beyond the close of the financial year.
9. This court in the aforesaid decision examined the scheme of the I. T. Act and held that, as per the said scheme, the income-tax chargeable on the income of the previous year under s. 4(1) shall be payable at five different stages. the first two stages arise before the commencement of the assessment year and they are by way of deduction at the source and advance payment. The I. T. Act requires payment of income-tax in respect of the income of the previous year by way of deduction at the source or advance payment before the assessment year has commenced. Since, at the stage, it would not be known as to what would be the total income of the assessee for the previous year and what would be the rate at which it would be chargeable to tax the I. T. Act has adopted a special basis and a special rate for the computation of income-tax to be deducted at source or paid in advance. So far as the other stages of payment of income-tax are concerned, they all arise after the commencement of the assessment year. There is in the first place a provision enacted in s. 140A for self-assessment by the assessee. This provision requires the assessee to pay earlier within thirty days of furnishing the return and now forthwith the tax payable on the basis of the return 'as reduced by any tax already paid under any provision of the Act'. If the assessee fails to make such payment, he renders himself liable to penalty within a maximum limit of fifty per cent. of the amount of tax which was required to pay on the basis of the return. The income-tax chargeable in respect of the income of the previous year is thus required to be paid at the stage of furnishing the return. But at this stage it is to be computed on the basis of the return submitted by the assessee. The next stage at which income-tax chargeable in respect of the previous year is required to be paid is the stage of provisional assessment which is dealt with in s. 141 and then follows the last stage of regular assessment under s. 143 of s. 144 when income-tax chargeable in respect of the income of the previous year is determined by the ITO. The order of assessment made by the ITO would be followed by a notice of demand. Having analysed the scheme of the Act, it was held by this court that advance tax was part and parcel of the income-tax itself and for enforcement of the payment of advance tax, the entire machinery for collection and recovery as provided by the Act was available to the revenue. It was further observed, in this connection, that advance tax is a tax with only this special characteristic that it is paid in advance instead of being paid on self-assessment or provisional assessment or regular assessment.
10. Once it is clear that advance income-tax is a tax which is paid in advance as provided under s. 210 of the I. T. Act, as an necessary corollary it follows that if not paid it remains income-tax payable and it would be a debt owed by the assessee at the relevant time. In the context of s. 2(m) read with s. 7 of the W. T. Act, the Supreme Court had an occasion to consider whether the amount of the provision for payment of income-tax and super-tax can be considered to be 'debt owed' within the meaning of s. 2(m) on the valuation date in Kesoram Industries and Cotton Mills Ltd. v. CWT : 59ITR767(SC) . The Supreme Court held that the phrase 'debt owed' within the meaning of s. 2(m) of the w. t. Act, 1957, could be defined as the liability to pay in presenti or in futro an ascertainable sum of money; that the charging section for the purposes of income-tax was s. 3 of the Indian I. T. Act, 1922, and the annual finance Acts only gave the rate for quantifying the tax; that a liability to pay income-tax was a present liability though the tax became payable after is was quantified in accordance with ascertainable data. there was a perfected debt at any rate on the last day of the accounting year and not a contingent liability. The rate was always easily ascertainable. If the finance Act was passed, it was the rate fixed by that Act; if the finance Act was not yet passed, it was the rate proposed in the Finance Bill pending before Parliament or the rate in force in the preceding year, whichever was more favorable to the assessee. all the ingredients of a 'debt' were present : it was a present liability of an ascertainable amount. In that light, it was held that the amount of the provisions for payment of income-tax and super tax in respect of the year of account ending of s. 2(m) on the valuation date, that is, March 31, 1957, and was a such deductible in computing the net wealth. Thus, a payment of advance tax, which is also a part and parcel of the income-tax results in the discharge of the personal liability which the assessee had incurred and as a tax payable, it was a debt owed by him, which was even otherwise available for deduction under s. 2(m) of the W. T. Act. Against the background of the aforesaid settled legal position we have to consider the question which is posed for our consideration as to whether the likelihood of certain income-tax refund which may be available to the assessee in future, on the basis is that he had paid an excess amount over the actual amount of tax finally found due in proper assessment as tax payable in the concerned assessment year, would constitute as asset within the meaning of s. 2(e) of the W. T. Act, 1957, so that it can be included in the total assets of the assessee as on the relevant valuation date.
11. Section 3 of the Act is the charging section and it provides that 'subject to the other provisions contained in this Act, there shall be charged for every assessment year commencing on and from the first day of April, 1957 a tax hereinafter referred to as wealth-tax, in respect of the net wealth on the corresponding valuation date of every individual, Hindu undivided family and company at the rate or rates specified in Schedule I'. Thus, the charge of wealth-tax is on the net wealth of the concerned assessee as on the valuation date. The word 'net wealth' is defined by s. 2(m) to mean 'the amount by which the aggregate value computed in accordance with the provisions of this Act of all the assets, wherever located, belonging to the assessee on the valuation, date, including assets required to be included in his net wealth as on that date under this Act, is in excess of the debts owed by the assessee on the valuation date other than...'. A conjoint reading of s. 3 read with the defination of 'net wealth' as given in s. 2(m) shows that the charge is only on the net wealth of the assessee which comprises of all assets belonging to him on the valuation date as are in excess of the aggregate value of the debts owed by him. Consequently, before the disputed amount of Rs. 76,857 by way of likely future income-tax refund can be included for computation of the net wealth of the assessee, it must be shown by the revenue that it constituted an asset belonging to the assessee on the valuation date. For that purpose, we have to turn to the word 'assets' as defined by s. 2(e) of the Act. The said provision reads :
'`Assets' include property of every description, movable to immovable but does not include.....'
12. Thus movable and immovable property of every description may be included in the asset and if such asset is found to be belonging to the assessee on the valuation date, only then it can go in the computation of his net wealth as found on the relevant valuation date. We have already shown above that liability to pay income-tax or even advance tax would by itself be a debt owed by an assessee, and as such its value will be liable to be deducted before arriving at the net wealth as per definition in s. 2(m). Now if such liability is discharged by the assessee and he has discharged his debt by actual payment of advance tax, it can by no stretch of imagination be held that the refund of the amount which was actually paid as advance income-tax would be converted into a real asset in the hands of the assessee.
13. It is true that in the balance-sheet such actual payment may be shown as an asset but in substance and reality, it is not an asset at all. Even this was intended by the rule making authority when rules under the W. T. Act of 1957 were framed. In this connection, it will be necessary to have a reference to rr. 1D, 2A and 2D. So far as r. 1D is concerned, and it is the subject-matter of the second question which is referred to us for our opinion in the present proceedings, it is provides that the market value of an unquoted equity shares of any company, other than an investment company or a managing agency company, shall be determined as per the procedure laid down therein. In Expln. II to this rule, it has been in terms provided that any amount paid as advance tax under s. 18A of the Indian I. T. Act, 1922 (11of 1922), or under s. 210 of the I. T. Act, 1961, shall not be treated as an asset. Rule 2A provides for the determination of the net value of the assets of a business as a whole and states that where the WTO determines under clause (a) of sub-s. (2) of s. 7, the net value of the assets of the business as a whole having regard to the balance-sheet of such business, he shall make the adjustments specified in rr. 2B, 2C, 2D, 2E and 2G. Once we turn to r. 2D, we find that it seeks to exclude that value of certain assets from computation of the total assets of the assessee. The said rule provides that the value of the following assets, which are disclosed in the balance-sheet, shall not be taken into account for the purposes of r. 2A :
'(a) Any amount paid as advance tax under 18A of the Indian Income-tax Act, 1922 or under section 21 of the Income-tax Act, 1961....'
14. It is true that directly these rules would not apply to the situation which had arisen for our considerations so far as the first question is concerned. Still they show broadly the intention on the part of the rule making authority to exclude any actual payment of advance income-tax from the computation of the total assets of the concerned assessee on the relevant valuation date. thus, the rule making authority has accepted the position that even though such payment of advance tax may be shown in the balance-sheet of the assessee as an asset, the same can never be included as an asset for the purpose of computation of the net wealth of the assessee under the Act. On a conjoint reading of the charging section with definition sections 2(m) and 2(e) and the aforesaid rules, which throw sufficient light on the intention of the rule-making authority it appears clear to us that merely because there is possibility of likelihood that in future, after the valuation date, the assessee may get some income-tax refund especially when the assessment proceedings on the valuation date are still pending, this future refund can never form part of the assets of the assessee as on the relevant valuation date so as to make it liable to be brought to tax under the charging provision of s. 3 of the Act.
15. Mr. Raval, learned advocate for the revenue, in support of his submission that this amount would from a part of the assets on the relevant valuation date, placed strong reliance on a decision of the Supreme Court in Neptune Assurance Co. Ltd. v. Life Insurance Corporation of India  48 ITR 144; 33 Comp Cas 289. In the aforesaid case, the Supreme Court was as to whether the right to receive a refund of income-tax was covered by the provisions of s. 7 of the LIC Act, 1956. The Appellant before the Supreme Court in the aforesaid case was an insurer which carried on both life insurance and other kinds of insurance business. During the calendar years 1954-55 and 1955-56 which were the previous years for the assessment years 1955-56 and 1956-57, respectively certain sums became due to the appellant as interest on securities wherefrom income-tax was deducted at source under s. 18 (3) of the Indian I. T. Act, 1922, and as dividends on shares which were grossed up be an amount which had to be treated as tax paid thereon under s. 16 (2) and s. 49B of that Act. In the assessment order for the assessment year 1955-56 credit was given to the appellant on account of taxes earlier paid of Rs. 48,271.56 in respect of its life insurance business and of Rs. 3,245.25 in respect of its general insurance business. The assessment order for that year showed a profit of Rs. 1,50,191 in the life insurance business and a loss of Rs. 23,607 as regards general business. As tax due on the income was less than the tax for which credit had been given a sum of Rs. 12,867.58 became refundable to the appellant. The assessment orders for these assessment years were both, however, made after September 1, 1956, on which date the life insurance business of the appellant became vested in the LIC by virtue of the provisions of s. 7 of the LIC Act, 1956. The Corporation claimed that part of those refunds which pertained to the life insurance business under s. 7 of the LIC Act. It is in this connection that the Supreme Court considered the scheme of s. 7 of the Act and held that the right to the refund no doubt existed in the appellant on September 1, 1956. It was no doubt true that the amounts of the refund had not been ascertained till the orders of assessment had been made and these had been later than September 1, 1956, the date on which all assets of the appellant insurance company passed into and vested in the Corporation by virtue of s. 7 of the Act. The Supreme Court observed in that connection that it was well established that under the income-tax law, the liability to be charged to tax, if any, exists all along and the amount of the liability depends on the Finance Act of the year concerned. that is the effect of s. 3 of the Indian I. T. Act (of 1922), which says that the tax at the rates mentioned in the Finance Act shall be charged for the specified in that Act. The Finance Act for the years 1955 and 1956, like all other such Acts, provided the rates at which income-tax was payable for the assessment years commencing from 1st April of the year in which the Acts were respectively passed. It would follow that on the 1st April in 1955 and in 1956 the amounts of the tax payable by the appellant became determinable for the income was then capable of computation and the rate was also known. So on these dates, the appellant became entitled to a refund of the amount of the tax deducted at the source or treated as paid on its behalf under the provisions of the I. T. Act earlier mentioned, which was in excess of the tax payable by it for each of these years. The assessment only particularised the amounts; it did not create the right, for the right came into existence as soon as, according to the relative Finance Act, it became ascertained that the tax deducted at source or treated as paid on its behalf had exceeded the tax payable. That right, therefore, was an asset contemplated by s. 7 of the Act of 1956.
16. The aforesaid observations make it clear that the Supreme Court held that the right to get the income-tax refund was available to the appellant, insurance company, on the basis of the wording of s. 7 of the LIC Act. Section 7 of the said Act, which was referred to be the Supreme Court read as under (p. 148 of 48 ITR (SC)) :
'7(1) On the appointed day there shall be transferred to and vested in the Corporation all the assets and liabilities appertaining to the controlled business is all insurers.
(2) The assets appertaining to the controlled business of an insurer shall be deemed to include all rights and powers, and all property whether movable or immovable, appertaining to his controlled business including in particular cash balance, reserve funds, investments, deposits and all other interest and rights in or arising out of such property as may be in the possession of the insurer and all the books of account or documents relating to the controlled business of the insurer; and liabilities shall be deemed to include all debts, liabilities and obligations of whatever kind then existing and appertaining to the controlled business of the insurer....''
17. The short question before the Supreme Court was whether the right to get refund of income-tax was a right in law. It was obvious that as s. 7(2) made even such a right as asset of the concerned insurer, once it was treated as an asset on the special definition of the word 'assets' as employed in s. 7(1) of the Act, it would vest in the corporation under the provisions of s. 7(1) of the Act. It was held by the Supreme Court that the right to get refund of income-tax was a right which was vested in the insurer on the relevant date and as such the said right was to be treated as as asset on the language of s. 7(2). It was held by the supreme Court that such a right had passed on to the Corporation. So far as the definition of the word 'assets' in the W. T. Act, 1957, is concerned we find that s. 2(e) is differently worded. It only includes property of every description movable and immovable. It does not extend to cover all other rights which s. 7(2) of the LIC act covered. Even otherwise, before an asset can be taken into consideration for computing the net wealth of the assessee under the W. T,. Act as per s. 2(m) such asset must belong to the assessee on the relevant valuation date. As the definitions of 'net wealth' and asset' a provided by the w. t. Act are differently worded the aforesaid decision of the Supreme Court cannot be of any assistance to Mr. Raval. On the facts of the present case it is clear that the mere possibility proceedings were to be finalised can never be treated to be an asset of the assessee on the valuation date and that too belonging to him on that day. On the contrary. all that he had done on the valuation date was that he had discharged his legal obligation by paying advance income-tax which otherwise is undischarged would remain as a debt owed by him on the valuation date. thus, such payment of any advance tax can by no stretch of imagination be treated as an asset of the assessee which belonged to him. On the contrary, on the valuation date, by payment of advance income-tax foe the concerned assessment year, the assessee had discharged his legal obligation or debts own by him to the central Govt. In that view of the matter, it cannot be said that the future possibility of getting refund from the advance tax paid can ever be treated as an asset of the assessee for the purpose of computation of his net wealth under the Act. It represented a mere change to get an asset in future may be years after the relevant valuation date when the assessment proceedings under the I. T. Act would get finalised. We, therefore, hold that this amount of Rs. 76,857 was not an asset at all in the hands of the assessee on the relevant valuation date especially against the background of the admitted fact that on the relevant valuation date, the assessment proceedings for the very assessment years were still pending.
18. Even Assuming however, that the mere likelihood of obtaining refund in future, of the income-tax paid for the concerned assessment years can be characterised as an asset in the hands of the assessee on the valuation date, even then, the position for the revenue is not improved at all. Against the background of the admitted fact that the assessment proceedings for the concerned assessment years were pending on the valuation date, it would be impossible to comprehend and predicate with any degree of certainty as to what would be the actual amount of income-tax refund, if any, which would be available to the assessee concerned in future and which could be treated as his asset on the valuation date. The right of the assessee to receive a particular amount of refund vis-a-vis the tax paid for a given assessment year was then a mere possibility. Equally so was the corresponding liability of the department to refund to him a particular amount. So long as the assessment proceedings were not processed and finalised by the I. T. Dept., the alleged right and the corresponding liability remained in a fluid state. Under these circumstances, it must be held that, even assuming that such likely amount of refund may be an asset, it was not capable of evaluation at all as on the valuation date and, as such, such an asset was not capable of being ascertained. Thus, such type of addition of a national asset on the anvil of the calculation of actual assets on the valuation date was not of any meaning at all and and was an exercise in futility and hence on that ground also, such an asset can never be treated as an asset for the purpose of arriving at the net wealth of the assessee during the relevant assessment year.
19. On the aforesaid reasoning, it appears clear to us that the AAC as well as the Tribunal were right in their view that the disputed amount of Rs. 76, 857 cannot be treated as a taxable asset of the assessee on the valuation date within the meaning of s. 2(e) of the W. T. Act. In that view of the matter, our answer to the first question as reframed is in the affirmative that is in favour of the assessee and against the revenue.
20. So far as the second referred question is concerned, the learned advocate of the respective sides agree that the answer to the second question is converted by our decision in Wealth-tax reference No. 3 of 1975, decided by us today (See CWT v. Ashok K Parikh : 129ITR46(Guj) ). For the reasons given by us in the said decisions we answer question no. 2 in the affirmative that is in favour of the assessee and against the revenue The Commissioner will pay costs of this reference to the assessee. Orders accordingly.