TMI Blog1983 (10) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... " 1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the liabilities claimed by the assessee, though existence of the very liability was questioned by the assessee, should be allowed as a 'debt owed' in computing the net wealth of the assessee ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the tax liabilities as allowed by the Wealth-tax Officer was not in accordance with law? " We think that the questions are indeed questions of law and the High Court should have called for a statement of the case from the Appellate Tribunal and rendered its opinion on the said questions. Ordinarily, we would have allowed the appeal and directed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... date and that so far as the assessment year 1967-68 was concerned, except the first item, the demands in respect of the rest of the items were raised subsequent to the relevant valuation date. The Appellate Tribunal held, following the judgment of this court in Kesoram Industries and Cotton Mills Ltd. v. CWT [1966] 59 ITR 767 and H. H. Setu Parvati Bayi v. CWT [1968] 69 ITR 864, that so long as the liability to pay the tax had arisen before the relevant valuation dates it was immaterial that the assessments were quantified after the relevant valuation dates. It was pointed out by the Revenue before the Appellate Tribunal that the income-tax liability for the assessment year 1965-66 of Rs.72,399 and the gift-tax liability for the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y crystallised under the relevant taxing statute on the valuation date. An income-tax liability crystallises on the last day of the previous year relevant to the assessment year under the I.T. Act, a wealth-tax liability crystallises on the valuation date for the relevant assessment year under the W.T. Act and a gift-tax liability crystallises on the last day of the previous year for the relevant assessment year under the G.T. Act. En passant, we may explain why we say that a gift-tax liability crystallises on the last day of the pertinent previous year under the G.T. Act. Section 3 of the G.T. Act levies gift-tax in respect of the gifts made by person during the previous year at the rates specified in the Schedule. Section 13 provides for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee on the valuation date. So long as such ultimate determination indicates the existence of a positive tax liability, it must be held that there is a debt owed by the assessee on the valuation date even though such determination may be subsequent in point of time to the valuation date. If, however, it is found on such ultimate determination that there is no tax liability, it cannot be said that merely because originally a tax liability had been determined and stood existing on the valuation date there was a debt owed by the assessee. The fact cannot be ignored that when the case was carried in appeal or reference it was found by the superior authority that in fact there was no tax liability at all. That final determination, eve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lenged its validity. It refers to the initial stage only where an appeal, revision or other proceeding is pending merely. It does not proceed beyond that stage to the point where, in consequence of such appeal, revision or other proceeding, the tax liability has been found to be nil. Once it is determined that the tax liability is nil, it cannot be said that any amount of tax is outstanding. Such a situation does not bring s. 2(m)(iii)(a) into operation at all, as is clear indeed from its very terms. If upon the ultimate determination it is found that the amount of tax is nil, the assessee is denied the deduction claimed by him not on the ground of s. 2(m)(iii)(a) but because the superior authority has found that there is no tax liability w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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