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Issues: Whether income-tax demands covered by an instalment scheme, falling due after the valuation date, could be treated as "outstanding" for more than twelve months on the valuation date within the meaning of section 2(m)(iii)(b) of the Wealth-tax Act, 1957, so as to be disallowed as a deductible debt.
Analysis: The liability arising from the demand notice was a debt owed by the assessee, but the statutory exclusion under section 2(m)(iii)(b) applied only to tax amounts that were payable and still outstanding for more than twelve months on the valuation date. The relevant amount was payable under an instalment arrangement on dates after the valuation date, and the assessee was not obliged to discharge it before that date. An amount which the assessee had the right to pay only after the valuation date could not be regarded as outstanding on that date. The expression "outstanding" had to be read in the context of the statutory scheme governing tax amounts payable in consequence of an order.
Conclusion: The demand amounts falling due after the valuation date were not "outstanding" for more than twelve months on that date, and the Tribunal was right in allowing the deduction in favour of the assessee.
Ratio Decidendi: For section 2(m)(iii)(b) of the Wealth-tax Act, 1957, a tax liability subject to an instalment scheme is not "outstanding" on the valuation date for more than twelve months if the assessee was entitled to pay it only after that date.
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