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TMI Blog1969 (7) TMI 22X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 mentioned in the grounds of appeal before the Appellate Assistant Commissioner on account of income-tax liability was only Rs. 3,81,098 but in a statement filed at the time of hearing of the appeal before the Appellate Assistant Commissioner this amount had been shown as Rs.7,47,181. It appears that the said sum of Rs.7,47,181 consisted of the following items : (a) Income-ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 and payable under the instalment scheme it was not outstanding for a period of more than twelve months within the meaning of section 2(m)(iii)(b) of the Wealth-tax Act, 1957. The Tribunal, therefore, directed that the said sum of Rs. 2,66,737 should be allowed as deduction as a debt within the meaning of section 2(m) of the Act. So far as item No. (ii) being a sum of Rs. 30,626 is con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y 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 assets, wherever located, belonging to the assessee on the valuation date, including assets required to be included in his net wealth as on that date under this Act, is in excess of the aggregate value of all the debts owed by the assessee on the valuation date other than-- (i) debts which under section 6 are not to be taken into account ; (ii) debts which are secured on, or which hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder 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 v. M. Damodar Bhat. There what had happened was a notice of demand under section 156 of the Income-tax Act, 1961, was served on the assessee for the assessment years 1962-63 and 1963-64, but time given for payment was to expire on the 21st May, 1965, but before the expiry of the period specified therein for the payment of the amount of the demand, the Income-tax Officer had issued on the 23rd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 assessee' on April 23, 1965, when the notice under section 226(3) of the new Act was issued. " Reliance was placed by learned counsel for the revenue on the aforesaid observations of the Supreme Court in support of his argument that even though the instalments granted by the department did not fall due, the amount of tax payable was still outstanding for a period of more than twelve months on the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 opinion, has therefore to be construed in the background of the expression " amount of tax .... payable in consequence of an order ....... ". Learned counsel for the revenue further contends that the moment notice of demand in respect of the sum was served these amounts became payable though the instalments had been granted. He urges that there is nothing to prevent the assessee from paying these amou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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