1979 (12) TMI 58

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.... " in this writ petition. The petitioner filed his return in the status of an HUF for the said year on February 18, 1975, and the WTO made an assessment on June 27, 1975, under s. 16(3) of the Act. In the course of the assessment, the petitioner claimed a deduction in regard to income-tax and wealth-tax liabilities for the assessment years 1966-67 to 1974-75. He claimed the said liabilities as a debt outstanding due and that they were allowable as the assessments in that behalf were made only on June 27, 1975. The WTO, however, allowed deduction of only the wealth-tax liability for the previous year under consideration and disallowed the claim in regard to wealth-tax for the earlier assessment years as also the income-tax liabilities. It....

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....old that the Wealth-tax Officer was perfectly justified in disallowing the assessee's claim in respect of cumulative income-tax and wealth-tax liabilities. The assessee is, however, entitled to deduction of income-tax and wealth-tax liabilities only in respect of relevant assessment year .........". The contention for the petitioner is that the rejection of the claim is based upon a misconception of the provisions of law. It is contended that the income-tax and wealth-tax liabilities were debts within the meaning of the expression in s. 2(m) and all such debts existing or outstanding due as at the relevant valuation date were to be deducted from the gross assets in order to arrive at the net wealth of the assessee and that such a liabili....

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....be ascertained by an evaluation of all the assets as at the valuation date and deducting therefrom all the debts owed by the assessee as at the valuation date. All the debts which would include income-tax and wealth-tax liabilities would have to be deducted from the gross assets in order to determine the net wealth. Section 2(m) itself makes an exception in regard to three items, namely : " (i) debts which under section 6 are not to be taken into account ; (ii) debts which are secured on or which have been incurred in relation to, any property in respect of which wealth-tax is not chargeable under this Act ; and (iii) the amount of the tax, penalty or interest payable in consequence of any order passed under or in pursuance of this....