Law: Wealth Tax Act, (XV of 1963)

Section: 27(1),2(m)

Wealth Tax Act (XV of 1963)- ---S. 2(m)--Debt owed--Tax liability, whether debt owed. The amount earmarked in the return gas the income-tax liability is a 'debt owed, which is adjustable out of the gross wealth within the scope of section 2(m) of the Wealth Tax Act. Since the amount shown as the liability of Income-tax could be allowed as a 'debt owed' for adjustment from the gross wealth under section 2(m) of the Act for the purposes of computation of net wealth of assessee, the amount shown as a liability of wealth tax under the Wealth Tax Act can as well be allowed as a 'debt owed' within the meaning of that section. Commissioner of Wealth Tax, Lahore v. Mst. Fozia Mughees (1975) 82 Taxation 1 and Commissioner. Wealth Tax, Centre Karachi v. Paracha Textile Mills Ltd. 1983 P T D 335 ref. JUDGMENT SAEEDUZZAMAN SIDDIQUI, J.-- The following question has been referred to this Court for decision under section 27(1) of the Wealth Tax-Act. "Whether on the facts and circumstances of the case, the Appellate Tribunal was right, in holding, that the tax liability in respect of the assessment year' 1972-73 is to be excluded under section 2(m) of the Wealth Tax Act for the 'purpose of computing the, net wealth liable for wealth tax for that very year? 2. The, admitted position in the case, is that the respondent in her return for the assessment year 1972-73 had shown certain amount payable as wealth tax for the purposes of deduction under section 2(m) of the Wealth Tax Act, to compute her net wealth. The Wealth Tax Officer disallowed the deduction holding that the amount of tax liability is not a debt owed by the assessee within the meaning of the Wealth Tax` Act. However on appeal the Appellate Tribunal reversed the order of Wealth Tax Officer and allowed deduction of this amount as a debt owed by the assessee under section 2(m) of the Wealth Tax Act. 3. Mr. Nasrullah Awan, the learned counsel for the Department/ petitioner contends that the amounts shown as Payable towards wealth tax for the assessment year in dispute could not fall within the definition of a debt…

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