Wealth tax

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Deepak Parsai (Querist)
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07 January 2011 What will be in case of theft of jwellery on 30th march, will it liable for wealth tax?
And what will happen if same found after 31st march i.e. After valuation date ?

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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08 January 2011 The assessee will be very lucky if he gets the jewellery back.

As he is the owner of the jewellery AS ON 31ST MARCH also (as if it was kept at different place, without the loss of ownership) he is liable for wealth tax. Had he not received back the jewellery till the date of return filing date , then he may not show as his wealth.

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Guest

Guest (Expert)

08 January 2011 No, the jewellery so stolen can not be the part of net wealth of the assessee as on valuation date as it's valuation will be zero as per provisions of schedule-III because it could not have fetch more than zero if sold on valuation date.

In case, stolen jewellery recovered back, even then it will be taken at zero as on valuation date because it could not have fetch more than zero if sold on valuation date as it was not possible to sell on valuation date

CA Shailesh Kumar Bhagat

CA Shailesh Kumar Bhagat (Expert)
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08 January 2011 valuation does not mean by physical status of the aseets. I am not agree with Mr. Moondra, Mr Bafna has correctly replied the query.

Guest

Guest (Expert)

08 January 2011 Please also read definition of Net Wealth u/s 2(m) along with Sec. 7 and Schedule-III of the WT Act. No doubt, stolen jewellery is the contingent asset of the assessee but it has no value on date of valuation as it is not saleable in open market on the valuation date and it can not fetch any value if it is sold on valuation date. And try to develope the legal position positively

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CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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08 January 2011 Yes Mr Mundra you are absolutely right. Please follow the link in which I have replied almost on the same line of yours.At that time the question was -

What will be in case of theft of jwellery on 30th march, will it liable for wealth tax?

https://www.caclubindia.com/experts/wealth-tax-560520.asp

Now in this, 2nd question has been added by Mr Parsai-
And what will happen if same found after 31st march i.e. After valuation date ?

I have checked that the person is going to
become a CA and he will start soon his (not this) Practice.

If this would be taken as a tax planning measure, Assets will disappear on the valuation date and will appear after the valuation date.

Actually it would be allowed, but in Practice we should take care of such practices as the client has lost nothing and being a consultant we have to guide him so that he would not face any harassment.

Secondly, after giving due thought to the problem which would arise in the very next year to the assessee, when he will show his net wealth by showing the "lost and found" jewellery. He will be unncessarily inquired in the doubt of undisclosed income.
Experience and practical approach says that it's better to pay wealth tax @ 1% on jewellery than
meeting the demand of officers.
The department would never reject your claim if you show the jewellery as part of your net wealth on valuation date.

Whereas it will be difficult to practically appear before the WTO when the lost welath will reappear.

On the above ground, it is hoped that suggestion
given by Mr Bhagat and my self are more valuable than the plain reading of law.

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CA SURENDRA KUMAR RAKHECHA

CA SURENDRA KUMAR RAKHECHA (Expert)
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12 January 2011 It seems Mr. Deepak Parsai wants to start his practice as a Wealth Tax Consultant as soon as he qualifies CA.

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Such hypothetical questions are generally raised by clients before practising CAs.

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Why ?

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Because CAs don't charge any fee for such questions.

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Now first of all; I wish to raise the following queries before him :

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Whether FIR has been lodged and the assets have been debited to the Capital account if it appears in the Balance Sheet ?

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From practical views; I agree with Mr. Paras Bafna.

If you follow his practice, then surely there would not be a single case that Assessing Officer can harass you.

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In case; you wish to fight with the department then the practices adopted by Mr. K C Moondra seems suitable.

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In this way; you can easily pass 3-4 years with your clients as well as with the department which will help you to establish your practice very soon.

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Guest

Guest (Expert)

13 January 2011 One should always think for savings of his clients and for all possible remedies.

Guest

Guest (Expert)

13 January 2011 Dear Surendra Ji,

Please be don't be irritated if some one argues continuously. If you felt that it was a hypothetical query, you could have avoided your participation. No doubt, you r a senior expert on this site but you should not demoralise any queriest if he is not satisfied with the replies. We have no compulsion for participating with the queries.

Deepak Parsai

Deepak Parsai (Querist)
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18 January 2011 Thanks to all experts.