LexCOMMISSIONER OF WEALTH TAX (CENTRAL), CALCUTTA versus M/S. STANDARD VACUUM OIL CO. LTD.
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A
COMMISSIONER OF WEALTH TAX (CENTRAL),
B
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D
E
F
CALCUTTA
v.
M/S. STANDARD VACUUM OIL CO. LTD.
October 25, 1965
[K. SuBBA RAO, J. C. SHAH AND S. M. SIKR!, JJ.]
Wealth Tax Act (27 of I957), ss. 2(111) and 3-Debt owed on va/ua· .
tion date-If includes advance tax due under s. 18A of fncon1e-tax Act,
I922.
Demands in ·respect of the payment of tax under s. ISA of the Income
Tax Act were made 'against the respondent for two years, and the final
instalment for each of the two years, was outstanding on the respective
valuation dates as defined under s. (q) of the Wealth Tax Act, 1957
The respondent claimed that the arrears of tax as determined
as per
notice under s. ISA constituted a debt, owned by it within the meaning
of s. 2(m) of the Wealth Tax Act, as on the valuation date, and that the
amounts shculd be allowed as deduction in
determining its net wealth
under the Wealth Tax Act.
The Appellate Tribunal referred the ques·
tion to the High Court and the High Court answered it in favour of the
respondent.
In appeal to this Court by the Commissioner of Wealth Tax,
HELD : The High Court \Vas right in answering
the
question
in
favour of the respondent.
A debt is owed when an order is passed under s. ISA(l) and a
notice of demand is sent.
The amount mentioned in the notice begins
to be ov,.red till a ne,w figure is substituted by the assessee under s.
18A(2). Till :t new estimate is made
by the assessee,
the amount js
<iscertaincd and there· is a statutory liability on the assessce to pay
the
amount mentioned in the order under s. 18A(l) of the Income Tax Act.
Since, on the valuation dates in the present appeals, the respondent had
not taken any action under s. 18A(2), the amounts
mentioned in the
notices of demand were debts owed within s. 2(m) of the Wealth Tax
Act on the valuation dates. (321 B-C]
CIVIL APPELLATE JUR1smcnoN : Civil Appeals Nos. 627
to 628 of 1964.
Appeals from the judgment and order dated May 14, 1962
of the Calcutta High Court in Wealth Tax Matter No. 154 of
G 1960.
A. V. Visivanatha Sastri, N. D. Karkhanis,
R. H. Dhebar
and R. N. Sachthey, for the appellant.
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T. A. Ramachandran, J. B. Dadachanji, 0. C. Mathur and
Ravinder Narain, for the respondent.
I
H
The Judgincnt of the Court was delivered by
Sikri, J.
Two questions were referred to the High Court by
the Appellate Tribunal under s. 27 of the Wealth Tax Act (XXVII
318
SUPREME
COURT
REPORTS
[1966] 2 S.C.R.
of 1957). We are only concerned with the second question which
A
reads as follows :
"Whether on the facts and in the circumstances of the
case, in computing the net wealth of the assessee, the
arrears of tax as determined as per notice under Section
18A of the Indian Income Tax Act for the two assess-
ment years under consideration constitute a debt owed
by the assessee within the meaning of section 2(m) of
the Wealth Tax Act as on the valuation date?"
The facts and circumstances of the case are as follows.
B
Demands in respect of the payment of tax under s. 1 SA of the
Indian Income Tax Act were made against the respondent com-
C
pany, M/s. Standard Vacuum Oil Co. Ltd., for the two years
ending December 31, 1956 and December 31, 1957, by notices
of demand dated May 28, 1956 and May 31, 1957, respectively.
The final instalment of the amount of Rs. 47,69,653 for each of
the two years was outstanding on the respective valuation dates.
The '-ssessee claimed that the demand for such tax should be
D
allowed as deduction in determining the net wealth of the assessee
under the Wealth Tax Act.
The Appellate Tribunal held that
this sum should be deducted fmm the total computation of wealth
if the said amount was outstanding for less than a year. It further
held that the demand created under s. 18A of the Income Tax
Act was a debt owed by the assessee, and it directed the Wealth
E
Tax Officer to ascertain "whether the demand referred to in this
case was outstanding for less than one year on the valuation date
and if so, he will allow the same as a deduction."
The High
Court, following its decision in Assam Oil Co. Ltd. v. Commis-
sioner of Wealth Tax (Central), Calcutta('), answered the ques-
tion in favour of the assessee.
The Revenue having
obtained · F
certificates of fitness from the High Court filed these appeals in
this Court.
Mr. Viswanatha Sastri, learned counsel for the Revenue,
contends that on a true interpretation of s. Excerpt shown. Read the full judgment & AI analysis in Lexace.