Law: Wealth Tax Act, (XV of 1963)

Section: 2(m),3,46,46A Schedule

(a) Wealth Tax Act (XV of 1963)--- ----Ss. 2(m), 3, 46 A Sched---Amount of wealth tax payable by an assessee in accordance with the schedule to the Wealth Tax Act, 1963, on his net wealth is not a debt owed and not liable to be deducted from the wealth of the assessee in the same year in respect of which it is payable---Wealth-tax liability is not open to deduction from the assets of the assessee as on valuation date corresponding to each of the said assessment years. Per Mirza Muhammad Wasim, Accountant Member--- "Valuation date" extended to the last fraction of a second of the said date (i.e. till mid-night) and the corresponding wealth-tax liability would be determined only on the expiry of that last fraction of second. The wealth-tax liability for the assessment year relevant to the said valuation date could not be considered as a debt owed on that valuation date. There is no doubt about the fact that the wealth-tax liability for any assessment year can come into existence only after the net wealth as on the relevant valuation date has become crystallized and thus it cannot b considered as a "debt owed" on the said valuation date. Although it is right that even by treating current wealth-tax liability as a debt owed, accuracy with a margin of only about a few paisas can be achieved, but an interpretation which does not result in complete accuracy in calculation of net wealth would remain somewhat suspect. Such deduction, if it has remained in arrears will constitute a `debt owed' by the assessee and its deduction can be allowed. No doubt, in the year under charge its deduction will not be permissible but once that liability has accrued and debt for that year has become a `debt owed' by the assessee then while computing the net assets of subsequent years, the deduction of this debt will have to be made by them on principle of `debt owed' or on the principle that by that debt the opening balance of the assets of the subsequent year automatically get reduced. Wealth tax liability for an assessment year cannot be considered to accrue and become a "debt owed" in the year under charge viz. on the valuation date relevant to the same assessment year. Section 46 of…

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