TMI Blog1965 (1) TMI 77X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.11 lakhs. In April, 1957, the assessee petitioned the Central Board of Revenue pointing out that the liability that had been imposed upon him arose mostly out of estimated additions which were disputed by him. He stated further that the net worth of his properties was only ₹ 6.51 lakhs and that if they were to be sold in realisation of the arrears of tax, the properties would fetch even less. He suggested that the total outstanding liability might be reduced to ₹ 6.50 lakhs and that he would withdraw all his petitions by way of appeals, revisions and the like for the relevant years. He also asked that the sum of ₹ 6.50 lakhs, at which his tax liability should be settled, should be made payable in instalments. This reques ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee, overruling the department's contention that because time had been granted for the payment of the amounts, the debt was not owing on the relevant valuation dates. It held that the liability did exist, that it had been quantified and relying upon the decision in Raja of Venkatagiri v. Commissioner of Incometax [1955] 28 I.T.R. 189, accepted the contention that for the first of the assessment years the sum of ₹ 3.75 lakhs represented the debt owed, and for the second, the sum of ₹ 2.25 lakhs and that these amounts should be deducted in the computation of the net wealth. The department applied under section 27(1) of the Wealth-tax Act, and the following question was referred by the Tribunal for our determination: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s claimed by the assessee in appeal, revision or other proceedings as not being payable by him; or (b) which, although not claimed by the assessee as not payable by him, is nevertheless outstanding for a period of more than 12 months on the valuation date. It is clear from this clause that where an amount of tax, penalty or interest, is payable by the assessee, and his liability is being questioned by him in proceedings in appeal, etc., that amount is not deductible. The other clause is, though the amount is not in dispute, if it is still outstanding for more than 12 months on the valuation date, that is not deductible. It is in the context of these exceptions that the present contention of the department has to be examined. The two valu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not one which could be traced to any provisions of the Act, it was not one under the Act at all, that is to say, it was not an income- tax liability in the form it took, so that whether it was outstanding for more than twelve months or not, whatever was outstanding on the relevant dates would still be deductible. There is no doubt, to our minds, that a debt was owed on the respective dates. The question is whether it is a debt owed at that point of time. The contention of the department is that the amount outstanding represents a debt to be paid on a future date and therefore it is not owed on the valuation date. It seems to us that this contention does not represent the true state of things. The relevant clause relating to the payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e only at a future date. That seems to us to be the correct interpretation of the expression a debt owed . In Commissioner of Wealth-tax v. Pierce Leslie Co. [1963] 48 I.T.R. 1005, 1015 a Bench of this court to which one of us was a party, pointed out that the essential requisites of a debt are: (1) an ascertained or readily calculable amount; (2) an absolute unqualified and present liability in regard to that amount with the obligation to pay forthwith or in future within a time certain; and (3) the obligation must have accrued and must be subsisting and should not be that which is merely accruing. It was observed herein [1963] 48 I.T.R. 1005, 1015: Broadly stated, it (the debt) is a liquidated money obligation for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s nothing more than an executive act by which the Government, in view of the impossibility of recovering the total amount demanded, was willing to accept a lesser amount, and an agreement, which has not been shown to be within the scope of the Act, was come to in this regard. It is true that if the contracting party, the assessee, failed to make the payments on the dates stipulated, the agreement would become void and the Government would have the right to proceed to recover the old income-tax arrears. But, if the assessee kept to the terms of the contract and made the payments on the due dates, Government lost the right to recover any amount over and above this amount of ₹ 6.50 lakhs. It seems to us that both in fact and in law, the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
