Law:

Section:

Section 2(m)(iii )(a) of the wealth-tax act, 1957-Net Wealth-Debt owed-Whether for purpose of attracting Section 2(m)(iii )(a) it is not sufficient that tax liability has accrued and it is necessary that a tax demand should have been made by assessing authority before valuation date for relevant assessment year-Held, yes-Whether for section 2(m)( iii)(a) to apply it is not necessary that appeal, revision or other proceeding Should be pending on valuation date itself and it is sufficient if that appeal, revision or other proceeding is filed subsequent to valuation date-Held, yes Facts For the assessment year 1961-62, the corresponding valuation date being 31-3-1961, the wealth-tax assessment order was made on 24-3-1961 but the notice of demand was served on the asses-see on 11-4-1961. Similarly, for the assessment year 1962-63, corresponding valuation date being 31-3-1962, the assessment order was made on 23-3-1962 but the notice of demand was served on 11-4-1962. For the aforesaid assessment years, the assessee claimed a deduction of certain sums representing the estimated liabilities on account of wealth-tax. The ITO did not accept the assessee's claim. On appeal before the Tribunal, the revenue contended that the assessee was not entitled to a deduction of the wealth-tax liability in respect of aforesaid assessment years because he had disputed the said liability in appeal and, therefore, the deduction was barred by reason of section 2(m)( iii)(a). The Tribunal, while rejecting the revenue's contention, held that section 2(m)( iii)(a) was not attracted in respect of the impugned liabilities as they had not become payable on the relevant valuation dates. On reference the High Court also upheld the Tribunal's order by holding that as the impugned liabilities were not outstanding on the respective valuation dates, section 2(m)(iii )(a) was not attracted, even though the assessee had challenged in appeal that these liabilities were not payable by him. On appeal by the revenue, the assessee contended that section 2(m )(iii)( a) was not attracted because no amount of tax was outstanding on the respective valuation dates and in any event, the appeals challenging…

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