Law:

Section:

section 2(m) of the wealth-tax act, 1957-net wealth-to settle disputes between her sons and purchase peace for the family, assessee wrote a letter to younger son promising to pay him balance amount if her elder son did not pay rs. 50 lakhs in full-since her elder son paid only rs. 20 lakhs, assessee, in pursuance to commitment, transferred to younger son war stock valued at rs. 11 lakhs and agreed to settle his balance claim-whether, while assessing the net wealth of assessee, the balance amount of rs. 19 lakhs could be deducted-held, on facts, that liability was created by family arrangement enforceable by law and hence the balance amount of rs. 19 lakhs was subsisting debt and was deductible in computing net wealth Facts The husband of the assessee, His Highness Bhojjrajji Manaraja Saheb of Gondal, died in estate leaving considerable movable and immovable properties. On his death certain disputes arose between his two sons in respect of the assets left over by their father. The assessee intervened and gave a letter to the younger son on 14-5-1953 stating that it was the will of his father to give him Rs. 50 lakhs, that she should get peace of mind and that if his elder brother did not give the full amount of Rs. 50 lakhs, he should get the balance of the amount from her. The elder son paid only Rs. 20 lakhs and the younger son claimed the balance amount from the assessee. Pursuant to the commitment, the assessee transferred, on 12-9-1959, war stock valued at Rs. 11 lakhs to the younger son and also agreed to hand over certain ornaments in full settlement of his claim. The balance of Rs. 19 lakhs remained due and continued to be due on the valuation dates relevant to the wealth-tax assessment years 1960-61, 1961-62 and 1962-63 the valuation date being 31-12-1959, 31-12-1960 and 31-12-1961 respectively. The matter was finally settled on 22-1-1962 evidenced by a document by virtue of which Rs. 10 lakhs were paid by the assessee to the younger son. The Wealth-tax Tribunal held that while assessing the net wealth of the assessee within the meaning of clause (m) of section 2 for the aforesaid three assessment years, the balance amount of Rs. 19 lakhs was to be…

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