Deductibility of decretal dues under wealth-tax depends on enforceable personal liability, not a liability limited to specific property.

A decretal amount is deductible in wealth-tax computation only if it reflects a legally enforceable personal liability of the assessee on the valuation date; a liability confined to property not available for recovery does not qualify as a "debt owed". On that basis, the assessee could not deduct the decretal dues from net wealth. The reassessment provision was also held applicable because, once the deduction claim failed, the basis for the earlier exclusion disappeared and reassessment was properly invoked for the relevant assessment years.

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Issues: (i) Whether the decretal amount of Rs. 30 lakhs and odd was deductible as a debt owed by the assessee in computing net wealth under the Wealth-tax Act; (ii) Whether section 17 of the Wealth-tax Act applied for the assessment years 1957-58, 1958-59 and 1959-60.

Issue (i): Whether the decretal amount of Rs. 30 lakhs and odd was deductible as a debt owed by the assessee in computing net wealth under the Wealth-tax Act.

Analysis: The expression "debts owed" in section 2(m) of the Wealth-tax Act was required to be read in the context of the assessee's actual legal liability on the valuation date. The decretal dues were not shown to be a personal liability of the assessee, and the creditors had been unable to proceed against the relevant assets. The obligation of a Hindu son, in any event, was limited to inherited property and did not establish a general personal liability to pay the father's debts from assets not so inherited. The principle governing "debt owed" did not extend to a liability which the assessee was not personally bound to discharge from his own assets.

Conclusion: The amount was not deductible as a debt owed by the assessee; the finding was against the assessee and in favour of the Revenue.

Issue (ii): Whether section 17 of the Wealth-tax Act applied for the assessment years 1957-58, 1958-59 and 1959-60.

Analysis: Once the decretal amount was held not to constitute a deductible debt owed by the assessee, the basis on which the earlier assessments had excluded that amount no longer survived. The reassessment action was therefore properly attracted on the facts found.

Conclusion: Section 17 of the Wealth-tax Act was applicable for the assessment years in question; the finding was against the assessee and in favour of the Revenue.

Final Conclusion: The assessee was not entitled to deduction of the decretal amount in computing net wealth, and the reassessment proceedings were validly invoked; the appeals succeeded for the Revenue.

Ratio Decidendi: For wealth-tax purposes, a claim is deductible as a "debt owed" only if it represents a legally enforceable personal liability of the assessee on the valuation date; a liability confined to property not available for recovery does not qualify.

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