Deductibility of voluntary disclosure tax liabilities under wealth-tax law was upheld as a debt in net wealth computation.

Income-tax and wealth-tax liabilities arising from a voluntary disclosure were treated as deductible debts under section 2(m) of the Wealth-tax Act, 1957 in computing net wealth. The Tribunal noted that the assessee had disclosed concealed income and assets under the Voluntary Disclosure of Income and Wealth Act, 1976, and that the disclosed wealth formed part of the pending wealth-tax assessments. It preferred judicial authority allowing such liabilities as deductible debts over the Revenue's contrary view, and upheld the assessee's claim.

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Issues: Whether income-tax and wealth-tax liabilities arising from voluntary disclosure were deductible as debts under section 2(m) of the Wealth-tax Act, 1957 in computing net wealth.

Analysis: The assessee had disclosed concealed income and assets under the Voluntary Disclosure of Income and Wealth Act, 1976, and the pending wealth-tax assessments included the disclosed wealth. The Revenue contended that the resulting tax liabilities were not debts deductible under section 2(m). The Tribunal noted that the issue was covered by several judicial decisions allowing such liabilities as deductions and preferred that line of authority over the contrary view relied on by the Revenue.

Conclusion: The tax liabilities arising from the voluntary disclosure were deductible under section 2(m) of the Wealth-tax Act, 1957, and the assessee's claim was upheld.

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