TaxTMI 
TaxTMI 
2005 (12) TMI 242
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....5 per cent discount towards the value of jewellery. The department is in appeal against the deduction of Rs. 24,42,160 being 15 per cent of the value of the gold jewellery. The learned counsel for the assessee fairly conceded that as per Rule 19 of Schedule III to the Wealth-tax Act, 1957 the value of any jewellery determined in accordance with Rule 18(3) for any assessment year shall be taken to be the value of such jewellery for the subsequent four assessment years. As such 15 per cent deduction is not to be allowed. Having heard both the sides on the point we decide this issue in favour of the Revenue and against the assessee. 4. The next issue relates to the question whether the income-tax and wealth-tax liabilities could be said to be....
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.... of the Wealth-tax Act, 1957, has been amended with effect from 1-4-1993. Under the amended clause (m), in the computation of the net wealth the assessee is to be allowed deduction only for debts owed by him on the valuation date which have been incurred in relation to the assets liable to wealth-tax. Up to the assessment year 1992-93, the assessee was to be allowed deduction for all the debts owed by him excluding certain debts such as those incurred in relation to or secured on any exempted asset or disputed tax liability. By virtue of this provision, deduction for wealth tax liability on the net wealth computed on the valuation date was also being granted for the purpose of computing the taxable net wealth. 2. Consequent to the amendmen....
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....d by construction, the approach suggested by Lord Coke in Heydon's case [1584] 3 Rep. 7b. yields better results:- "To arrive at the real meaning, it is always necessary to get an exact conception of the aim, scope and object of the whole Act, to consider, according to Lord Coke: 1. What was the law before the Act was passed; 2. What was the mischief or defect for which the law had not provided; 3. What remedy Parliament has appointed; and 4. The reason of the remedy." 10. As per the Memorandum explaining the provisions of the Finance Bill, 1992 (194 ITR St. 205) only those debts which have been secured on, or which have been incurred in relation to the assets will be allowed as a deduction in the computation of net wealth. It is explained....
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.... silverware. 13. A debt is a present obligation to pay an ascertainable sum of money, whether the amount is payable in praesentior in futuro: debitum in praesenti, solvendum in futuro. The condition precedent for allowability of such debt is that it must have been incurred in relation to the taxable asset, in the case of Smt. Padmavati Jaikrishna v. Addl. CIT [1987] 166 ITR 176 the Hon'ble Supreme Court has held that payments of income-tax and wealth-tax are liabilities of personal nature. 14. We have considered the various precedents relied upon at the time of hearing. There is no dispute on the point that the deduction is permissible only if the debts owed could be said to be incurred in relation to the assets. In our opinion the liabi....