1983 (10) TMI 2

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..... eted after the valuation date is the liability as ascertainable on the valuation date or the actual amount of tax subsequently assessed ? " The facts are substantially similar for different appeals and, therefore, it will be sufficient to set forth the facts in one of them alone. In Civil Appeal No. 1524 of 1973, the facts are these. In the computation of his net wealth for the assessment year 1962-63, the corresponding valuation date being March 31, 1962, the assessee claimed a deduction in respect of debts which included amounts representing estimated liabilities on account of income-tax and wealth-tax for the assessment year 1962-63. The WTO rejected the claim on the ground that as those liabilities were claimed on the basis of an esti .....

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..... behalf of the Revenue that the High Court has erred, and that on a true construction of s. 2(m) of the W.T. Act, defining the expression " net wealth " the tax liability disclosed by the assessee in his returns should be taken as representing the debt owed by, the assessee on the valuation date. Now, it is settled law that an income-tax liability becomes crystallized on the last day of the previous year corresponding to the particular assessment year and wealth-tax liability becomes crystallized on the valuation date corresponding to the particular assessment year. In each case the liabilities are perfected debts on the last day of the previous year or the valuation date, as the case may be. See Kesoram Industries and Cotton Mills Ltd. v. C .....

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..... the final result to a true determination of the tax liability. There may be cases where the assessment finally made may be reopened in accordance with the procedure and subject to the conditions stated in the relevant statute. There may also be cases where a rectification of apparent errors is effected pursuant to jurisdiction granted by the relevant statute. Both these proceedings are similarly intended for the true quantification of the tax liability. When, in the course of a wealth-tax assessment, the assessee makes a claim to deduction on account of income-tax, wealth-tax and gift-tax liabilities subsisting as debts owed by him on the valuation date, it is the final quantification of the particular tax liability which must be taken int .....

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