Future compensation as debt for wealth-tax purposes, even before quantification, was held includible in net wealth.

A present obligation to pay money in the future can constitute a debt even if the exact amount is still unascertained, provided the liability already exists and payment is certain. Applying that principle, the Andhra Pradesh HC treated the balance compensation payable under the land abolition enactment as an existing liability of the Government to the assessee. The unquantified nature of the amount did not prevent it from being regarded as a debt owing to the assessee, and it was therefore includible in the assessee's total wealth under the Wealth-tax Act. The question was answered in favour of the Revenue.

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Issues: Whether the balance compensation payable in future under the land abolition enactment, though not yet quantified, constituted a debt owing to the assessee and was includible in the assessee's net wealth under the Wealth-tax Act.

Analysis: The advance compensation already received was not pressed as a dispute. The controversy was confined to the unascertained balance compensation. The governing principle applied was that a debt is not confined to a sum presently payable; it also includes a present obligation to pay in future. The fact that the precise amount is to be ascertained later does not destroy the character of the liability as a debt, provided the obligation itself already exists and payment is certain, even though quantification is deferred. On that footing, the future balance compensation payable under section 39 of the abolition enactment was treated as an existing liability of the Government to the assessee.

Conclusion: The balance compensation was a debt owing to the assessee and therefore an asset includible in the total wealth. The question was answered in favour of the Revenue.

Ratio Decidendi: A present obligation to pay money in the future is a debt even if the exact amount is yet to be ascertained, and such a debt is an asset for wealth-tax purposes.

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