Law: Wealth Tax Act, (XV of 1963)

Section: 27(3),2(m),2(m)(iii)(a)

Law: Gift Tax Act, 1958

Section: 3,15

Wealth tax-- ---Assessment--Liabilities--Quantification of--Debt owed--Meaning-­Computation of net wealth-- Valuation date--Assessee claiming a deduction in computation of net wealth on account of liabilities in respect of income-tax, gift tax and wealth tax--Department partially rejecting claim on plea that two sums of income-tax liability and gift tax liability would not constitute "debts owed" and would not qualify for deduction as such demands had been cancelled against assessee in appeal by Appellate Assistant Commissioner and such cancellation had become final--Held, whether a debt was owed by assessee on valuation date would depend on the fact that a liability had already crystallized under the relevant taxing statute on the valuation date--Quantification of income-tax, gift tax and wealth tax liability is determined by correspond­ing assessment order--Quantification effected by assessment order may be varied as income-tax, wealth tax and gift tax case is carried in appeal reference etc.--It is the quantification of tax liability by the ultimate judicial authority which will determine amount of debt owed by assessee on valuation date even though such determination may be subsequent in point of time to the valuation date. Keshoram Industries & Cotton Mills Ltd. v. C.I.T. (1966) 59 ITR 767: A I R 1966 S C 1370 = (1966) 2 SCR 688 and H.H. Setu Parvati Bayi v. C.W.T. (1968) 69 I T R 864 and Late P. Appavoo Pillai v, C.W.T. (1973) 91 I T R 138 ref. JUDGMENT PATHAK, J.--These appeals are directed against the judgment of the Madras High Court refusing to call for a reference from the Appellate Tribunal under section 27(3) of the Wealth Tax Act on the following two questions: (1) Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the liabilities claimed by the assessee, though existence of the very liability was questioned by the assessee, should be allowed as a 'debt owed' in computing the net wealth of the assessee? (2) Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the tax liabilities as allowed by the Wealth Tax Officer was not in accordance with law? We…

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