Crystallised leave wage liability is deductible as a debt in wealth-tax computation when the obligation is already ascertainable.

A liability for leave with wages, where it has crystallised from services already rendered and is ascertainable on the valuation date, is treated as a debt already incurred for wealth-tax computation. The Tribunal found from the firm's agreements and books that the amounts were set apart against an existing obligation, not a contingent future claim. On that basis, the provision was deductible in computing the assessee's interest in the firm for wealth-tax purposes, and the question was answered in favour of the assessee.

---

---

Issues: Whether the assessee was entitled to deduction in computing wealth-tax in respect of provision made by the firm for payment of leave with wages.

Analysis: The liability for leave with wages had, on the facts found, become a settled obligation in the cashew industry as a matter of practice following the earlier industrial ruling, and it related to services already rendered by the workers. The Tribunal found from the agreements and books of account that the amounts were set apart against an existing and ascertainable liability on the valuation date, not against a mere contingent or future liability. Such amounts, being in the nature of debts already incurred, were properly deductible while computing the assessee's interest in the firm for wealth-tax purposes.

Conclusion: The question was answered in favour of the assessee and against the Department.

Ratio Decidendi: A liability which has already crystallised and is ascertainable on the valuation date is a deductible debt in wealth-tax computation, even if described in accounts as provision for leave with wages.

---