Net wealth deduction for enforceable liabilities, including bonus and tax provisions, turns on present and ascertainable debt.

A present and ascertainable statutory or enforceable liability is a debt deductible in computing net wealth, even if exact quantification or payment follows later. On that basis, the provision for employees' bonus was deductible because the liability had become enforceable and had been admitted by the assessee, with advances also made against it. The provision for income-tax was deductible because tax liability becomes a debt once it is a present obligation capable of ascertainment. The same reasoning applied to sales tax, as liability arose from taxable turnover and was not a mere contingency. The disputed provisions were therefore deductible in computing net wealth.

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Issues: (i) Whether the provision made for bonus payable to employees was deductible in computing the assessee's net wealth. (ii) Whether the provision made for income-tax and sales tax liabilities was deductible in computing the assessee's net wealth.

Issue (i): Whether the provision made for bonus payable to employees was deductible in computing the assessee's net wealth.

Analysis: Bonus had evolved from a voluntary payment into an enforceable legal claim and, in the circumstances of the case, the assessee had admitted liability up to the amount provided and had in fact made advances against bonus. The liability was not treated as a mere contingent obligation but as a present debt owed to the workmen, capable of being taken into account in computing net wealth.

Conclusion: Deduction for the provision for bonus was permissible and the answer was in favour of the assessee.

Issue (ii): Whether the provision made for income-tax and sales tax liabilities was deductible in computing the assessee's net wealth.

Analysis: A liability to tax becomes a debt when it is a present obligation capable of ascertainment, even though quantification and demand may follow later. The provision for income-tax was therefore deductible. Sales tax liability stood on the same footing, since the statutory obligation arose from taxable turnover and the amount represented a debt rather than a mere contingency.

Conclusion: Deduction for the provisions for income-tax and sales tax was permissible and the answer was in favour of the assessee.

Final Conclusion: The assessee succeeded on the substantive questions decided by the Court, and the disputed bonus, income-tax, and sales tax provisions were held deductible in computing net wealth.

Ratio Decidendi: For wealth-tax purposes, a present and ascertainable statutory or enforceable liability is a debt owed by the assessee and may be deducted in computing net wealth, even if its exact quantification or payment occurs later.

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