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1965 Supreme(Pat) 128
PATNA HIGH COURT
R.L.Narasimham, U.N.Sinha and S.N.P.Singh JJ.
Commissioner Of Wealth Tax
Versus
Sahu Jain Ltd.
Miscellaneous Judicial Case No. 288 of 1961 ;
Decided On : DECEMBER 20, 1965
The liability to pay income-tax is a present liability even though it might not have been quantified in accordance with ascertainable data.
Headnote:
Wealth Tax - Interpretation of 'debt owed' - The liability to pay income-tax is a present liability even though it might not have been quantified in accordance with ascertainable data.
Fact of the Case:
The reference under Sec.27(1) of the Wealth Tax Act raised the question of whether the tax liability provided for in the balance sheet for certain assessment years amounts to a debt owed by the assessee within the meaning of Sec.2(m) of the Wealth Tax Act.
Finding of the Court:
The court, referring to a recent judgment of the Supreme Court, held that the liability to pay income-tax is a present liability even if not quantified in accordance with ascertainable data, and therefore, the tax liability in question amounts to a debt owed by the assessee.
Issues: Interpretation of the expression 'debt owed' in the Wealth Tax Act.
Ratio Decidendi: The court relied on the recent judgment of the Supreme Court in Kesoram Industries and Cotton Mills Ltd. v/s. Commr. of Wealth Tax (Central) Calcutta, which established that the liability to pay income-tax is a present liability even if not quantified in accordance with ascertainable data.
Final Decision: The court answered the question in the affirmative, concluding that the tax liability provided for in the balance sheet amounts to a debt owed by the assessee.
1. In this reference under Sec.27(1) of the Wealth Tax Ad by the Wealth Tax Tribunal, the following question of law was referred for our opinion:
"Whether the tax liability of Rs. 11,48,348 provided for in the balance sheet for the assessment years 1956-57 and 1957 58 amounts to a debt owed by the assessee within the meaning of Sec.2(m) of the Wealth Tax Act"
2. This case was referred to a Full Bench mainly because of the conflicting decisions of the various High Courts about the true meaning of the expression "debt owed" occurring in the Wealth Tax Act But this point had been set at rest by the recent Judgment of their Lordships of the Supreme Court in Kesoram Industries and Cotton Mills Ltd. V/s. Commr. of Wealth Tax (Central) Calcutta, (1965) 58 I.T.R. Part 11, p. 37 (short notes of current cases) where their Lordships by a majority held that the liability to pay income-tax is a present liability even though it might not have been quantified in accordance with ascertainable data. Following this decision we must answer the question in the affirmative. There will be no order for costs.
