Law:

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Section 2(m) of Wealth-tax Act, 1957 - Net Wealth - Whether sum which had been set apart by assessee company as an estimated provision for meeting its tax liability in future less advance tax liability under Income-tax Act would be a debt Owed by assessee within meaning of section 2(m) - Held, yes - Whether in computing net wealth of assessee instalment of advance-tax due under section 18A of Income-tax Act would constituted a debt owed by assessee within meaning of section 2(m) - Held, yes FACTS The High Court held (1) that the amount set apart by the assessee-company as an estimated provision for meeting its tax liability in future less the last instalment of demand under section 18A(1) of the Indian Income-tax Act was not a debt owed by the assessee on the relevant valuation date within meaning of section 2(m); but (2) that in computing the net wealth of the assessee, the final instalment due under section 18A of the Indian Income-tax Act constituted a debt owed within the meaning of section 2(m) as on the valuation date being 31-12-1956. On appeal to Supreme Court : HELD In Kesoram Industries & Cotton Mills Ltd. v. CWT [1966] 59 ITR 767 (SC) it was held that the liability to pay tax under the Indian Income-tax Act was a debt owed by the assessee on the relevant valuation date within the meaning of section 2(m ). Following the said , the High Court was wrong in its aforesaid decision as at (1) above. In CWT v. Standard Vacuum Oil Co. Ltd. [1966] 59 ITR 569 (SC), it was held that demand for advance payment of tax under section 18A of the Indian Income-tax Act was a debt within the meaning of section 2(m ). Following that , the High Court was correct in its decision as at (2) above. Note : This case was decided in favour of the assessee. CASE REVIEW Decision of the Calcutta High Court in Assam Oil Co. Ltd. v. CWT [1963] 48 ITR 49 affirmed. CASES REFERRED TO Kesoram Industries and Cotton Mills Ltd. v. CWT [1966] 59 ITR 767 (SC), Assam Oil Co. Ltd. v.CWT [1963] 48 ITR 49 (Cal.), CWT v. Standard Vacuum Oil Co. Ltd. [1966] 59 ITR 569 (SC) JUDGMENT Subba Rao, J.-These two appeals, which are cross-appeals, arise out of the same judgment of the High Court of…

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