TMI Blog1967 (12) TMI 4X X X X Extracts X X X X X X X X Extracts X X X X ..... tax Officer, A-Ward, Trivandrum, completed the assessment of the appellant to wealth-tax as follows : Assessment year Net wealth assessed Rs. 1958-59 73,36,303 1959-60 72,47,522 1960-61 74,31,760 The appellant took the matter in appeal to the Appellate Assistant Commissioner of Wealth-tax, Trivandrum, and contended that the liability to income-tax and wealth-tax as mentioned below should be deducted in computing the net wealth of the appellant as on the relevant valuation dates corresponding to the respective assessments : Assessment year Total tax liability claimed Amount of income-tax liability claimed Amount of wealth-tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ust (P.) Ltd. in computing the value of the shares of that company as on August 16, 1957, August 16, 1958 and August 16, 1959, was justified? (3) Whether, on the facts and in the circumstances of the case, the Tribunal is justified in law to hold that an amount of Rs. 7,00,000 being the provision made for tax and shown in the balance-sheet as on August 16, 1957, should be allowed as a deduction in computing break-up value of the shares in Messrs. Narayanan Investment Trust (P.) Ltd.?" After hearing the reference the High Court answered the second and the third questions in favour of the appellant and against the department. With regard to the first question, the High Court took the view that the wealth-tax liability of a particular ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation date, including assets required to be included in the net wealth as oil that date under the Act, is in excess of the aggregate value of all the debts owed by the assessee on the valuation date. It is manifest that charge of the wealth-tax under the Act is, according to the terms of section 3, imposed on the net wealth of the assessee computed on the valuation date after adjusting the debts owed by the assessee on that date and permitted to be taken into account. Unlike the Income-tax Act, the Wealth-tax Act prescribes the rate of tax in the Schedule, and it is evident that by virtue, of section 3 of the Act the liability to pay wealth-tax gets crystallized on the valuation date, and not on the first day of the year of assessment. O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... present obligation to pay an ascertainable sum of money, whether the amount was payable in praesenti or in futuro debitum in praesenti, solvendum in futuro. A liability to pay income-tax was therefore a present liability though it became payable after it was quantified in accordance with ascertainable data. There is a perfected debt at any rate on the last day of the accounting year and not a contingent liability. The rate is always easily ascertainable. If the Finance Act is passed, it is the rate fixed by that Act ; if the Finance Act is not passed, it is the rate proposed in the Finance Bill pending before Parliament or the rate in force in the preceding year, whichever is more favourable to the assessee. All the ingredients of a "debt" ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 58-59. We accordingly hold that the first question referred to the High Court must be answered in favour of the appellant and that in the facts and circumstances of the case, the liability towards wealth-tax calculated on the basis of wealth-tax return filed by the appellant is an admissible deduction under section 2(m) of the Act for the purpose of computation of the net wealth of the appellant for the assessment years 1958-59, 1959-60 and 1960-61. On behalf of the respondent Mr. B. Sen referred to the decision of the Mysore High Court in Commissioner of Income-tax Wealth-tax v. Amco Batteries (P.) Ltd. and of the Punjab High Court in Raja Sir Harinder Singh Brar Bans Bahadur v. Wealth-tax Officer, A-Ward, Bhatinda, in which it was held ..... X X X X Extracts X X X X X X X X Extracts X X X X
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