Irrecoverable debt excluded from net wealth where recovery was remote and the asset had no realisable value.

A debt that is practically irrecoverable and has no realistic market value is not includible in net wealth for wealth-tax purposes. Here, the debt due from M/s. Govind Glass Works Ltd. and the accrued interest were treated as unrealisable because recovery had remained unsuccessful despite civil proceedings, the debtor-company had been struck off, service of notices was failing, and the debtor was effectively untraceable. On those facts, the possibility of recovery was held to be remote, and the debt was directed to be excluded from the assessee's net wealth.

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Issues: Whether the debt due from M/s. Govind Glass Works Ltd. together with accrued interest was liable to be included in the assessee's net wealth for wealth-tax purposes.

Analysis: The debt had remained unrecovered despite institution of civil proceedings. The debtor-company had been struck off from the register, notices in the suit were not being served, and the circumstances indicated that the debtor was practically not traceable. On these facts, the possibility of recovery was held to be remote and the debt to lack realisable value for wealth-tax computation.

Conclusion: The debt due from M/s. Govind Glass Works Ltd. and the accrued interest were directed to be excluded from the net wealth.

Ratio Decidendi: Where a debt is shown to be practically irrecoverable and has no realistic market value, it is not includible in net wealth for wealth-tax purposes.

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