Summarize the following court judgment. Civil Appeals NOS. 1311 and	 1312 of 1973. From the Judgment and Order dated 26/27.6.1972 of the Gujarat High Court at Ahmedabad in Wealth Tax Reference Nos. 3	 4	 20	 25	 29	 32	 32 & 36 of 1970 and 1 of 1971. S G. Manchanda	 B.B. Ahuja	 R.N. Poddar and Miss A. Shubhashini for the Appellant. S.T. Desai Mrs. A.K. Verma and K.J. John for the Respondents. These appeals are directed against the judgment of the Gujarat High Court disposing of a wealth tax reference and answering the following question of law against the Revenue "Whether	 on the facts and in the circumstances of the case	 the Tribunal was right in holding that the provisions of section 2 (m) (iii) (a) were not applicable in respect of liabili 300 ties arising under the wealth tax assessments of the asses see for the assessment years 1960 61 and 1961 62 ?" For the purpose of determining the assessee 's net wealth in assessment proceedings under the Wealth Tax Act in respect of the assessment years 1961 62 and 1962 63	 the corresponding valuation dates being March 31	 1961 and March 31	 1962	 the assessee claimed a deduction of certain sums representing the estimated liabilities on account of income tax and wealth tax. The claim was rejected by the Wealth Tax Officer in both assessments. On appeal by the assessee the Appellate Assistant Commissioner of Wealth Tax allowed a part of the claim. In the appeal pertaining to the assessment year 1961 62	 he allowed a deduction of Rs. 22	679 on account of wealth tax relating to the assessment year 1960 61	 Rs.39	692 on account of wealth tax relating to the assessment year 1961 62 and Rs. 2	25	053 on account of income tax for the assessment year 1961 62. In the appeal pertaining to the assessment year 1962 63	 the Appellate Assistant Commissioner allowed the total claim of Rs. 9	02	377 comprising a deduction of Rs 39	692 on account of wealth tax relating to the assessment year 1961 62	 Rs. 77	716 on account of wealth tax for the assessment year 1962 63 and the balance on account of income tax for the assessment year 1962 63. The Revenue appealed to the Appellate Tribunal. In the appeal for the assessment year 1961 62 in contended inter alia	 that the assessee was not entitled to a deduction of the wealth tax liability of Rs. 22	679 in respect of the assessment year 1960 61 because he had disputed the said liability in appeal and	 therefore	 the deduction was barred by reason of section 2(m) (iii) (a) of the Wealth Tax Act. Similarly	 in the appeal for the assessment year 1962 63	 the Revenue urged that the assessee was not entitled to a deduction of the wealth tax liability of Rs. 39	692 for the assessment year 1961 62 as he had disputed that liability in appeal and the deduction was barred by section 2(m) (iii) (a) of the Act. The Appellate Tribunal did not accept the contention of the Revenue and held that s.2(m) (iii) (a) was not attracted in respect of those liabilities as they had `G not become payable on the relevant valuation dates. At the instance of the Revenue	 a reference	 being Wealth Tax Reference No. 20 of 1970	 was made to the Gujarat High Court for its opinion on the question of law set forth earlier. It may be mentioned that another question was also framed in that reference	 and that this reference along with several other 301 references were disposed of together by the Gujrat High Court by	 its judgment in Commissioner of Wealth Tax vs Kantilal Manilal.1 Against that judgment corresponding special leave petitions were filed by the Revenue in this Court	 but all the special leave petitions	 except Special Leave Petitions (Civil) Nos 505 and 506 of 1973	 arising out of Wealth Tax Reference No. 20 of 1970	 were dismissed on the merits	 and in respect of these two special leave petitions the grant of special leave was restricted to the consideration of the question set forth earlier. While dealing with the question whether the provisions of section 2(m) (iii) (a) of the Wealth Tax Act barred the deduction of the wealth tax liabilities claimed by the assessee the High Court held that as the liabilities were not outstanding on the respective valuation dates section 2(m) (iii) (a) was not attracted even though the assessee had challenged in appeal that the liabilities were not payable by him. In these appeals	 Shri S.C. Manchanda	 appearing for the Revenue	 contends that the High Court has erred insofar as it has held that the wealth tax liabilities were not outstanding on the valuation dates. His case is that the bar imposed by section 2(m) (iii) (a) operates against the claim to deduction made by the assessee. Shri S.T. Desai	 appearing for the assessee	 urges that section 2(m) (iii) (a) is not attracted because no amount of tax was outstanding on the respective valuation dates and in any event	 he says	 the appeals challenging those liabilities were not pending on the valuation dates	 and therefore the further requirement	 according to him	 of the statute was not satisfied. Section 2(m) of the Wealth Tax Act provides: "(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 (z this Act	 is in excess of the aggregate value of all the debts owed by the assessee on the valuation date other than (i) xx xx xx (1) (1973). 	 z z 302 (ii) XX XX XX (iii) the amount of the tax	 penalty or interest payable in consequence of any order passed under or in pursuance of this Act or any law relating to taxation of income or profits	 or the (34 of 1953)	 the Expenditure Tax Act	 	 or the (18 of 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 him	 is nevertheless outstanding for a period of more than twelve months on the valuation date " In the process of computing the net wealth	 the statute requires the aggregation of the value of all the debts owed by the assessee on the valuation date	 except those debts which are specifically described in sub clauses (i)	 (ii) and (iii). We are concerned with sub clause (iii) (a).A debt which ordinarily falls within the scope of the substantive provision of section 2(m) cannot be taken into account for the purpose of determining the net wealth if it falls within the term of sub clause (iii) (a) of section 2(m). Sub clause (iii) (a) speaks the amount of the tax	 penalty or interest payable in consequence of any order passed under or in pursuance of any of the tax laws mentioned therein	 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. For the assessment years 1961 62 and 1962 63 under reference	 the corresponding valuation dates	 as we have mentioned earlier are March 31	1961 and March 31	 1962 respectively The claim to deduction in the wealth tax liability for the assessment year 1961 62 relates to Rs. 22	679 representing the wealth tax liability for the assessment year 1960 61. The assessment order for the assessment year 1960 61 was made on March 24	 1961 but the notice of demand was served on the assessee on April 11	 1961. It is apparent that the notice of demand was served some days after the valuation date	 March 31	 1961. In the wealth tax assessment of the assessment year 1962 63 the deduction claimed relates to the wealth tax liability of Rs. 39	692 for the assessment year 1961 62. The assessment order 303 on March 23	 1962 but the notice of demand was served on April 11	 1962 and that notice of demand was also served a few days after the relevant valuation date	 March 31	1962. Therefore	 the notice of demand in each case was served after the valuation date had passed. There was no demand already subsisting on the respective valuation dates. In order to invoke section 2 (m) (iii) (a) the Revenue must establish that an amount of the tax was outstanding on the valuation date. An amount of tax is outstanding if it is payable and has remained unpaid. In other words	 if there is a debt due and there has been no payment of the debt. In a case under the Indian Income Tax Act	 1922	 Doorga Prasad vs The Secretary of State	 (1) the Privy Council laid down that an income tax liability becomes a debt due when payment of the tax is demanded by a notice issued under section 29 of the Act. There are three stages in respect of an income tax liability. The tax liability comes into existence on the last day of the previous year relevant to the assessment year. Thereafter when the assessment proceedings take place	 an assessment order is made quantifying the assessable income and determining the tax payable. Thereupon	 a notice of demand is served for payment of the tax	 and the tax then becomes payable and a debt becomes due to the Revenue. That was the position under the Indian Income Tax Act	 1922 and continues to be the position under the Income Tax Act	 1961.A survey of the provisions of the Wealth Tax Act will demonstrate that in all material respects the scheme of the Wealth Tax Act is in this regard substantially the same as that incorporated in the Income Tax Act. The provisions for the assessment are of an assessee are contained in sections 14 to 17A of the Wealth Tax Act. The notice of demand requiring payment of the tax	 interest or penalty is issued pursuant to section 30 of the Act. If the amount remains unpaid within the period specified in the notice the amount of the tax is said to be outstanding. A question was raised whether for the purposes of attracting section 2(m) (iii) (a) it is not sufficient that the tax liability has 6 accrued and it is necessary that a tax demand should have been made by the assessing authority. It seems to us that section 2(m) (iii) (a) comes into play only after a demand for payment of tax has been made. The clause	 read in its entirety	 speaks of a debt owed by the (1) 304 assessee represented by an amount of tax "payable in consequence of any order" passed under the relevant tax statute "outstanding on the valuation date". The expression "debt owed" has been held by this Court in Kesoram Industries & Cotton Mills Ltd. vs Commissioner of Wealth Tax (Central)	 Calcutta	 (1) to mean a debt which the assessee is under an obligation to pay and	 therefore	 it includes both a liability to pay in praesenti as well as a liability to pay in future an ascertainable sum of money. Both kinds of liabilities are included within the expression "debt owed". But when we refer to the clause under consideration	 it narrows the scope down to a liability which exists in present time. That is so because the clause speaks of tax outstanding in consequence of an order passed under the relevant taxing statute. As discussed earlier	 tax becomes payable in consequence of such order when a notice of demand is served on the assessee. In the present case	 it is clear that as the notices of demand respecting the wealth tax liability of Rs 22	679 and Rs. 39	692 were served on the assessee subsequent to the valuation dates	 it can not be said that on the respective valuation dates the amounts of tax were outstanding. In the result a material requirement of section 2 (m) (iii) (a) is not satisfied and therefore that provision cannot be invoked by the Revenue. We now propose to consider the other point in controversy. As is apparent. if the Revenue desires to invoke section 2 (m) (iii) (a)	 it must establish not only that the amount of the tax	 penalty or interest envisaged in that provision is outstanding on the valuation date but it must also show that the amount is claimed by the assessee in appeal	 revision or other proceeding as not being payable by him. The question is whether it is a necessary requirement of the provision that the appeal	 revision or other proceeding should be pending on the valuation date itself or it suffices that the appeal	 revision or other proceeding is filed subsequent to the valuation date. In the present case the appeal against the wealth tax assessment order for the assessment year 1960 61 was filed on May 9	 1961	 and the appeal against the wealth tax assessment order for the assessment year 1961 62 was filed on May 9	 1962. Both the appeals were filed	 therefore	 after the respective valuation dates	 March 31	 1961 and March 31	 1962 corresponding to the assessment years 1961 62 and 1962 63 (1) ; 305 under reference. But for section 2(m) (iii) an amount of a tax outstanding on the valuation date would constitute a debt owed by the assessee on the valuation date	 and the assessee would be entitled to claim its deduction in the process of computing his net wealth. Parliament	 however	 intended that if the amount of the tax was challenged by the assessee as not being payable by him by recourse to any of the statutory remedies prescribed in the relevant Act	 such 1 claim to deduction would be barred. Plainly	 in order to give full effect to that intent it is immaterial whether the statutory remedy is being availed of on the valuation date or has been taken thereafter. A challenge by the assessee that the amount outstanding is not payable by him is sufficient to bar his claim to deduction whether the challenge is subsisting on the valuation date or is initiated after the valuation date has passed. Accordingly	 we are of opinion that the appeals in the present case	 though filed subsequent to the respective valuation dates	 would nonetheless have sufficed to bring the second requirement of section 2(m)` (iii) (a) into operation. The contrary view in respect of section 2 (m) (iii) (a) adopted by the Madras High Court in Late P. Appavoo Pillai vs Commissioner of Wealth Tax	 Madras(4) appears to us to be incorrect. However	 as in order to invoke the bar prescribed by section 2 (m) (iii) (a)	 it is necessary for the Revenue to establish that both requirements are satisfied	 that is to say	 that an amount of the tax is outstanding on the valuation date and further that the amount is claimed by the assessee in an appeal as not being payable by him	 and the Revenue has been unable to show that in the present case the sum of Rs. 22	679 and Rs. 39	692 representing the wealth tax liabilities for the assessment years 1960 61 and 1961 62 were outstanding on the respective valuation dates corresponding to the assessment year under reference	 the Revenue must fail. In the result	 the appeals are dismissed. S.R. Appeals dismissed.

For the assessment years 1961 62 and 1962 63	 the corresponding valuation dates of which were March 31	 1961 and March 31	 1962	 assessment orders were made under the Wealth Tax Act on March 24	 1961 and March 23	 1962 respectively while the notice of demands were served on the assessee on April 11	 1961 and April 11	 1962 respectively. Against the said notices of demand the assessee preferred appeals on May 9	 1961 and May 9	 1962 respectively. For the purpose of determining the assessee 's net wealth	 the assessee 's claim for a deduction of certain sums representing the estimated liabilities on account O? ' income tax and wealth tax was rejected in both assessments by the Wealth Tax Officer. On appeal by the assessee	 the Appellate Assistant Commissioner of Wealth Tax allowed a part of the claim. In appeal before the Appellate Tribunal	 the Revenue contended that since the assessee had disputed the wealth tax liability of Rs. 22	679/ in respect of the assessment year 1960 61 and the sum of Rs. 39	692/ in respect of the assessment year 1961 62	 he was not entitled to a deduction of the same	 being barred by reason of the provisions of section 2(m) (iii) (a) of the Wealth Tax Act. The Tribunal rejected the said contention and held that section 2 (m)(a) was not attracted as the tax had not become payable on the relevant valuation dates. The Wealth Tax References made at the instance of the Revenue were decided in favor of the assessee by the High Court of Gujarat by its common judgement in Commissioner of Wealth Tax vs Kantilal Manilal reported in The present appeal by special leave arises therefrom. Dismissing the appeal	 the Court ^ HELD: 1.1 In order to invoke the bar prescribed by Section 2(m) (iii) (a) of the Wealth Tax Act it is necessary for the Revenue to establish that both 298 requirements therein are satisfied	 that is to say	 that an amount of the tax is outstanding on the valuation date and further that the amount is claimed by the assessee in an appeal as not being payable by him. [302E F] 1.2 An amount of tax is outstanding if it is payable and has remained unpaid. In other words	 if there is a debt due and there has been no payment of the debt. There are three stages in respect of an income tax liability. The tax liability comes into existence on the last day o f the previous year relevant to the assessment year. Thereafter when the assessment proceedings take place an assessment order is made quantifying the assessable income and determining the tax payable. Thereupon	 a notice of demand is served for payment of the tax	 and the tax then becomes payable and a debt becomes due to the Revenue. A survey of the provisions of the Wealth Tax Act contained in Sections 14 to 17 and Section 30 makes it clear that in all material respects the scheme of the Wealth Tax Act is in this regard substantially	 the same as that incorporated in the Income Tax Act. The notice of demand requiring payment of the tax	 interest or penalty is issued pursuant to Section 30 of the Act. If the amount remains unpaid within the periods specified in the notice the amount of the tax is said to be outstanding [303D F] 1.3 Section 2(m)(iii)(a) of the Wealth Tax Act comes into play only after a demand for payment of tax has been made. The clause	 read in its entirety	 speaks of a debt owed by the assessee represented by an amount of tax "payable in consequence of any order" passed under the relevant tax statute and "outstanding on the valuation dates." [303H; 304A] 1.4 The expression "debt owed" is a debt which the assessee is under an obligation to pay and	 therefore	 it includes both a liability to pay in present as well as a liability to pay in future an ascertainable sum of money. Both kinds of liabilities are included within the expression "debt owed". But Section 2(m)(iii)(a) narrows the scope down to a liability which exists in present time because the clause speaks of tax outstanding in consequence of an order passed under the relevant taxing statute. [304B C] 1.5 In the present case	 the notice of demand in each case was served after the valuation date had been passed. There was no demand already subsisting on the respective valuation dates. As the notices of demand respecting the wealth tax liability of Rs. 22	679 and Rs. 39	692 were served on the assessee subsequent to the valuation dates	 if cannot be said that on the respective valuation dates the amount of tax were outstanding. In the result a material requirement of Section 2(m) (iii) (a) is not satisfied and therefore	 it cannot be invoked by the Revenue. [304D E] Commissioner of Wealth Tax vs Kantilal Manilal	 	 approved. Doorga Prasad vs The Secretary of State	 	 quoted with approval 299 Kesoram Industries & Cotton Mills Ltd. vs Commissioner of Wealth Tax (Central)	 Calcutta	 ; 	 followed. 1.6 The appeals in the present case	 though filed subsequent to the respective valuation dates	 would none the less have sufficed to bring the second requirement of section 2 (m) (iii) (a) into operation. But for Section 2 (m) (iii) (a) an amount of a tax outstanding on the valuation date would constitute a debt owed by the assessee on the valuation date	 and the assessee would be entitled to claim its deduction in the process of computing his net wealth. Parliament	 however	 intended that if the amount of the tax was challenged by the assessee as not being payable by him by recourse to any of the statutory remedies prescribed in the relevant Act	 such claim to deduction would be barred. Plainly	 in order to give full effect to that intent it is immaterial whether the statutory remedy is being availed of on the valuation date or has been taken thereafter. A challenge by the assessee that the amount outstanding is not payable by him is sufficient to bar his claim to deduction whether the challenge is subsisting on the valuation date or is initiated after the valuation date has passed. [305 D; A C] Late P. Appauoo Pillai vs Commissioner of Wealth Tax	 Madras	 overtuled.