Case: Commissioner of Wealth Tax (Central) Calcutta Vs. Moon Mills Limited

In the computation of the net wealth of the assessee as on the material valuation date, theOfficer refuted to allow deduction in respect of a sum of Rs. 10, 81, 971 being theliability of the assessee. The major part of the amount represented theassessed and demanded from thein respect of the assessment yearwhich had been disputed in appeal and was not paid on the valuation date. Before the Appellate Assistant Commissioner and the Tribunal the claim for deduction was scaled down to Rs. 10, 31, 971. The Tribunal allowed deduction only in respect of the sum of Rs. 37, 701 being the last instalment of advance tax demanded under section 18A, which remained outstanding on the valuation date. Regarding the balance of Rs. 9, 94, 270 being the amount ofliability which had been disputed by the assessee in appeal, the Tribunal held that it could not be allowed as a deduction in the computation of the net wealth in view of sectionHigh Court answered the question in favour of the assessee on the assumption that the same is covered by the decision of this court in Kesoram Industries and Cotton Mills Ltd. v. Commmissioner ofThe material facts of that case were : In itsfor the year ending March, 31, 1957 the assessee had made provision for the payment ofax in respect of that year of account. The question was whether that amount was debt owed within the meaning of section 2(m) of theAct. The court answered that question in the affirmative. Therein the court did not go into the scope of(iii) of section 2(m) of theAct as the facts of that case did not come within the scope of that provision. Clause (m) of section 2 reads as follows" (m)  net wealth  means the amount by which the aggregate value computed in accordance with the provisions of this Act of all the assets, wherever located, belonging to the assessee on the valuation date, including assets required to be included in his net wealth as on that date under this Act, is in excess of the aggregate value of all the debts owed by the assessee on the valuation date otherthe amount of the tax, penalty or interest payable in consequence of any order passed under or its pursuance of this Act or any law relating to taxation of income or profits, or the Estate Duty Act, 1953, theAct, 1957, or theAct, 1958, (a) which is outstanding on the valuation date and is claimed by the assessee in appeal, revision or other proceeding as not being payable by him, or(b) which, although not claimed by the assessee as not being payable by h im, is nevertheless outstanding for a Period of more than twelve months on the valuation date." [Emphasis supplied.]

Reasoning:
In view of thisthe assessee was not entitled to claim the deduction in question. The High Court clearly erred in overlooking this clause though the same had been pointedly referred to in the statement of the case