TaxTMI 
TaxTMI 
1967 (12) TMI 4
X X X X Extracts X X X X
X X X X Extracts X X X X
....36,303 1959-60 72,47,522 1960-61 74,31,760 The appellant took the matter in appeal to the Appellate Assistant Commissioner of Wealth-tax, Trivandrum, and contended that the liability to income-tax and wealth-tax as mentioned below should be deducted in computing the net wealth of the appellant as on the relevant valuation dates corresponding to the respective assessments : Assessment year Total tax liability claimed Amount of income-tax liability claimed Amount of wealth-tax liability claimed. 1958-59 Nil 1,33,127 1,33,127 1959-60 Nil 1,37,995 1,37,995 1960-61 1,07,102 1,56,691 2,63,793 The Appellate Assistant Commissioner rejected the claim of the appellant. Against th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....0,000 being the provision made for tax and shown in the balance-sheet as on August 16, 1957, should be allowed as a deduction in computing break-up value of the shares in Messrs. Narayanan Investment Trust (P.) Ltd.?" After hearing the reference the High Court answered the second and the third questions in favour of the appellant and against the department. With regard to the first question, the High Court took the view that the wealth-tax liability of a particular year could not be deducted as a liability for that year but could be deducted in subsequent years subject to the provisions of section 2(m) of the Act. In the course of its judgment, the High Court observed that the liability for wealth-tax for the year 1958-59 commenced only ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the terms of section 3, imposed on the net wealth of the assessee computed on the valuation date after adjusting the debts owed by the assessee on that date and permitted to be taken into account. Unlike the Income-tax Act, the Wealth-tax Act prescribes the rate of tax in the Schedule, and it is evident that by virtue, of section 3 of the Act the liability to pay wealth-tax gets crystallized on the valuation date, and not on the first day of the year of assessment. On behalf of the appellant, counsel put forward the argument that the High Court erred in deciding that the wealth-tax payable by the appellant became a liability only on April 1 of the financial year for which it was payable and therefore it could not be treated as a liabili....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ccordance with ascertainable data. There is a perfected debt at any rate on the last day of the accounting year and not a contingent liability. The rate is always easily ascertainable. If the Finance Act is passed, it is the rate fixed by that Act ; if the Finance Act is not passed, it is the rate proposed in the Finance Bill pending before Parliament or the rate in force in the preceding year, whichever is more favourable to the assessee. All the ingredients of a "debt" are present and therefore it is a present liability of an ascertainable amount. It was further held that the amount of provision for payment of income-tax and super-tax in respect of the year of account ending March 31, 1957, was a " debt owed" within the meaning of section....