TMI Blog1969 (7) TMI 22X X X X Extracts X X X X X X X X Extracts X X X X ..... t valuation date was 31st March, 1937, M/s. Banarashi Prasad Kedia filed a return of net wealth in the status of a Hindu undivided family. From the gross value of the assets shown, the assessee claimed a sum of Rs. 3,81,098 on account of income-tax liability as a deduction before arriving at the net wealth. The Income-tax Officer disallowed the entire amount on the ground that this was not admissible under the Act. The assessee preferred an appeal from the decision of the Wealth-tax Officer to the Appellate Assistant Commissioner. It was contended before the Appellate Assistant Commissioner that the Wealth-tax Officer should have allowed deduction of income-tax liabilities before arriving at the net wealth of the assessee. The amount ment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dian Income-tax Act, 1922 2,66,737 (ii) Demand in respect of assessment year 1952-53 for which demand notices had been served on the assessee by the valuation date 30,626 As regards item No. (i) it appears that although the demand notice in respect of a large sum of money had been served on the assessee in December, 1954, the income-tax authorities had granted an instalment scheme for the payment of the same and according to the said scheme, the assessee had been paying. The sum of Rs. 2,66,737 represented the " outstanding " amount in respect of instalments falling due after the relevant valuation date, namely, 31st March, 1957. The Tribunal held that the said sum of Rs. 2,66,737 was a debt owed and as the said sum had not become due a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alls for determination is, whether in those circumstances it can be said that this amount was outstanding for a period of more than 12 months on the relevant valuation date. The demand notice for the entire sum under section 34(1B) of the Indian Income-tax Act, 1922, was served on the assessee in December, 1954, long before the relevant valuation date. In order to resolve the controversy in this case we have to refer to the provisions of sub-section (m) of section 2 of the Wealth-tax Act, 1957, after the amendment by the Finance Act of 1959, with retrospective effect. The provisions are in the following terms : " (m) 'net weath' means the amount by which the aggregate value computed in accordance with the provisions of this Act of all the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, 1957, the assessee is not entitled to deduction of this sum of money. It is also not disputed that this is an amount which is also payable in consequence of an order passed under the law relating to taxation of income. Therefore, it fulfills the requirement of sub-clause (iii) of section 2(m) of the Wealth-tax Act, 1957. The question that requires consideration is whether an amount which under the instalment scheme was due to be paid by the assessee on dates subsequent to the relevant valuation date can be said to be " outstanding " on the relevant valuation date for a period of more than 12 months. Learned counsel for the revenue drew our attention to the decision of the Supreme Court in the case of Third Income-tax Officer, Mangalore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payment of income-tax and super-tax in respect of the year of account ending March 31, 1957, in that case, was a 'debt owed' within the meaning of section 2(m) of the Wealth-tax Act, and was as such deductible in computing the net wealth. It was further observed in that case that there was a perfected debt at any rate on the last date of the accounting year and not a contingent liability. In the present case, there is the additional circumstance that the assessments of tax and penalty have been made against the respondent and demand notices have also been issued under section 156 of the new Act. It is, therefore, not possible to argue that the amount of tax and penalty for the assessment years 1962-63 and 1963-64 were not 'due by the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... praesenti or in futuro. In view of the aforesaid decision of the Supreme Court it is also manifest that the sum of Rs. 2,66,737 was a debt owed by the assessee. In the decision of the Supreme Court in the case of Third Income-tax Officer, Mangalore v. M. Damodar Bhat, it has been held that these amounts were also " due by the assessee ". But in order to construe the expression " outstanding " it has to be borne in mind, in view of the language used, that it is not only that the amount of tax that must be outstanding for more than twelve months on the relevant valuation date, it must be the amount of tax which is payable and is still outstanding. The expression " outstanding " in section 2(m)(iii)(b) of the Wealth-tax Act, 1957, in our opini ..... X X X X Extracts X X X X X X X X Extracts X X X X
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