Crystallised tax liabilities are deductible debts for wealth-tax even if assessment is completed later.

Liabilities towards income-tax, wealth-tax and gift-tax that crystallise on the valuation date are deductible as debts owed in computing net wealth under the Wealth-tax Act, even if the assessment orders quantifying them are finalised later. The deduction is not defeated by section 2(m)(iii) merely because the amount had not become due for payment before the valuation date or was not outstanding on that date. The liability was therefore treated as a deductible debt for wealth-tax purposes in favour of the assessee.

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Issues: Whether liabilities towards income-tax, wealth-tax and gift-tax that crystallised on the relevant valuation date, though quantified in assessment orders finalised later, were deductible as debts owed while computing net wealth under the Wealth-tax Act, 1957.

Analysis: The question stood covered by binding Supreme Court authority holding that liabilities towards income-tax, wealth-tax and gift-tax which crystallise on the valuation date are deductible in computing net wealth, even if the assessment orders determining those liabilities are completed after that date. The deduction is not defeated by section 2(m)(iii) where the amount had not become due for payment before the valuation date and was not outstanding on that date.

Conclusion: The issue was answered in the affirmative, and the deduction of the liability was upheld, in favour of the assessee and against the Revenue.

Ratio Decidendi: A liability that has crystallised on the valuation date is a deductible debt owed for wealth-tax purposes, notwithstanding that the assessment order determining it is finalised later.

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