ITAT Directs to Delete Disallowance on Deduction in respect of Wealth Tax Paid [Read Order]

ITAT directed the deletion of disallowance on deduction in respect of wealth tax paid
ITAT - ITAT Mumbai - Disallowance on Deduction - Wealth Tax - Disallowance on deduction case - TAXSCAN

The Mumbai bench of the Income Appellate Tribunal ( ITAT ) directed the deletion of disallowance on deduction in respect of wealth tax paid.

During the course of assessment the AO disallowed the assessee’s claim of deduction of wealth tax paid during the relevant financial year amounting to Rs.12,56,152/-

The Commissioner of Income Tax ( Appeals ) has upheld the additional amount. The assessee has argued that a similar issue, based on identical facts, pertaining to the assessee’s case from Assessment Year 1995-96 to Assessment Year 1998-99 was decided in the assesse’s favor

Wealth tax was essentially aimed at taxing the super-rich taxpayers who both by inheritance or on their own, accumulated wealth and therefore, had to make a larger contribution to the exchequer.

Resident Indians were liable to pay wealth tax on their global assets. However, non-resident Indians and foreigners were liable to pay wealth tax on their assets in India only.

If a non-resident Indian returns to India, his assets would not be exempt from wealth tax. Assets acquired by NRIs within one year of their return are also exempt.

The two member bench of the tribunal comprising Aby T Varkey ( Judicial member ) and Amarjith Singh ( Account member ) observed that in the case of the taxpayer for Assessment Year 1998-99, the ITAT, following the precedent set by coordinate benches, concluded that the wealth tax paid by the taxpayer was not subject to disallowance. In alignment with the decisions of the coordinate benches, the Assessing Officer was instructed to remove the disallowance.

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