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TMI Blog2009 (3) TMI 420X X X X Extracts X X X X X X X X Extracts X X X X ..... arrived at with the Commissioner of Income-tax on March 24, 1975, was allowable as a deduction under section 2(m)(iii) of the Wealth-tax Act, 1957? 2. Whether on the facts and circumstances of the case the Tribunal was justified in holding that M/s. Hazarimal Milapchand Soorana was an industrial undertaking within the meaning of the Explanation to section 5(1)(xxxi) and as such the assessee was entitled to deduction under section 5(1)(xxxii) of the Wealth-tax Act,1957?" 2. The brief facts relevant to the first question are that in the assessment year 1976-77, the assessee claimed deduction of income-tax liability of Rs.l0, 76, 380 and wealth-tax liability of Rs.1,143 pertaining to the assessment years 1958-59 to 1971-72. It was contended ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aj). It is submitted that the controversy in the aforesaid case was similar to that of the present matter and the Division Bench of this court decided the matter in favour of the assessee. The Division Bench of this court observed as under (page 389): "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in allowing deduction of income-tax liability pertaining to earlier years and quantified on settlement reached sometime in 1975 out of the gross amount of the assessee's share amounting to Rs.76,000?' The only difference in the sane question pertaining to the remaining assessment years is at the end in respect of the particular year to which the reference relates. The assessee was a partner in a f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 64 (SC) in support of its conclusion. It has been held that the tax liability incurred by the assessee on this amount had crystallised on the valuation date and, therefore, it was a 'debt owed' within the meaning of section 2(m) of the Wealth-tax Act, 1957, on account of which the amount of tax due on this amount of Rs.76,000 had to be deducted from the estimated value of the asset on the valuation date. It was pointed out that the ultimate quantification of the tax liability as a result of the settlement reached in 1975 did not have the effect of postponing the time when the tax liability had accrued, as a result of the income being earned. Hence, this reference at the instance of the Revenue. There are several decisions of the Supreme Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pression 'outstanding' in section 2(m)(iii)(a) and (b) will have to be construed in the background of the phrase 'amount of tax. . . payable in consequence of an order' and in that context it must mean remaining unpaid after the obligation to pay is incurred. We are informed that similar construction has been placed on the expression 'out standing' occurring in section 2(m) (iii) of the Act by the Calcutta High Court in CWT v. Banarashi Prasad Kedia [1970] 77 ITR 159 (Cal) and by the Allahabad High Court in CWT v. Padampat Singhania [1972] 84 ITR 799 (All), and we affirm the same, In the instant case, it was an admitted position before the Tribunal that under the scheme of instalments sanctioned in the settlements the two sums, in respect w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Daga (HUF) [1988] 172 ITR 264 and relevant para of the judgment is quoted hereunder (page 426): "The meaning of the expression 'industrial undertaking' used in section 5(1)(xxxii) has to be understood as defined in the Explanation to section 5(1)(xxxi) of the Act and accordingly the term 'industrial undertaking' means an undertaking engaged in the business of manufacture or processing of goods. From the above findings, it is evident that the whole activity is not done by the karigars alone. But some of it is also done by the assessee's firm themselves dominant of which is marking and removal of deposits from various edges of the stone. This results into change in physical characteristics of the commodity. The effect of each operation on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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