COMMISSIONER OF WEALTH TAX, LUCKNOW versus RAJA VISHWANATH PRATAP SINGH

Citation: [1996] 3 S.C.R. 1150 · Decided: 03-04-1996 · Supreme Court of India · Bench: J.S. VERMA · Disposal: Appeal(s) allowed

Judgment (excerpt)

A 
B 
COMMISSIONER OF WEALTH TAX, LUCKNOW 
v. 
RA.TA VISHWANATH PRATAP SINGH 
APRIL 3, 1996 
. IJ.S. VERMA AND SUHAS C. SEN JJ.] 
Wealth Tax Act 1957-Sections 2(111) and I-Net wea/t/,,-Deduc-
tio11s-Debts owed-Personal liability-Application for liquidation of debts by 
assessee's father-On his death, estate taken over by cowt of ward, savings 
C invested in Govenunent securities, interest eanzed thereon collected by the 
assessee--Decree passed in the nanie of the assessee--Decree holder's clabn 
against an1ount held in Govenunent seciuities opposed by assessee as the 
amount was not pa1t of estate of his fathei-Proceedings under Section 17 of 
Wealth Tax Act-Amount held in Govemment securities is 11et wealth of the 
D assessee and there can not be any deduction of a11y decretal dues since as-
sessee is not personally Liability for the debt-Plea of pious obliga-
tio1t-Rejected--011 the relevant valuation date the assessee was not saddled 
with a decretal debt-Having successfully thwaited the attempts of the decree 
holders to proceed against the aforesaid Govemment secwities and the in-
conie arising therefroni, the assessee can not clabn that the decretal dues are 
E his debts which are personally payable by him. 
Hindu Law-Pious obligation-The obligation of the son to pay off the 
debts contracted by his fathe1~Limited to the prope1ties inherited by the son 
from his father. 
F 
The Respondent's rather, a Zamindar, tiled an application fur liqui-
dation of his debts under section 4 of U.P. Encumbered Estates Act 1934 
and he died during the pendency of the application and the respondent 
was brought on record as his "Legal representative. The court of Wards 
took over the estate and a sum of Rs. 6,11,324 secured out of savings of 
G the estate was invested by it in Grwernment securities. The interest accrued 
thereof was collected by the respondent. 
The proceedings under U.P. Encumbered Estates Act was decreed in 
the name of the respondent for R•. 30,00,000. Decree-holder's claim against 
the amount held in Government securities was opposed by the respondent. 
H The special Judge held that the decree-holders could not proceed against 
1150 
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C.W.T. v. R.V. PRAT AP SINGH 
1151 
the amount which did not form part of estate of the deceased. The High A 
Court upheld the order of the special Judge. 
The Wealth Tax assess1nent of the asst:ssee \\'as con1pleted for the 
assessment years 1957-58, 1958-59, 1959-60, during the peudency of the 
application for li11uidation of debts. And, the decretal amount of Rs. 
30,00,000 was treated as 'debt owed' by the respondent and it was held that B 
respondent was not liable to pay tax under the \\'ealth tax Act. But, 
proceedings under Section 17 of wealth tax Act were initiated against the 
respondent after the High Court order. The Wealth Tax Ollicer concluded 
that the amount held in Government securities constituted the net wealth 
of the respondent against which the decretal amount could not be set off, C 
and that since the decretal amount of Rs. 30,00,000 could not be recovered 
from the respondent personally it was not a debt owed by the respondent. 
In an appeal to the Appellate Assistant Commissioner, plea of pious 
obligation was taken up which was dismissed holding that under the Hindu 
Law the creditors could not proceed against the assets of the assessee for D 
fulfilling his pious obligation to pay the decretal dues of his l"ather. Appeal 
preferred against this order was dismissed by the Tribunal. 
At the instance of the assessee, the following two questions of law 
were referred to the High Court under Section 27 of the Wealth Tax Act : 
"1. Whether on the facts and in the circumstances of the case the 
debts amounting to Rs. 30 Lacs and odd, more or less for each of the 
assessment years under appeal, were rightly not allowed as a deduction in 
calculating the net wealth of the assessee ? 
2. Whether on the facts and under the circu1nstances of the case the 
provisions of Section 17 of the Wealth Tax Act were applicable so far as 
the assessment years 1957-58, 1958-59 and 1959-60 are concerned ? 
' 
The High Court answered the first question by holding that the debt 
E 
F 
amount to Rs. 30,00,000 and odd should have been allowed as a deduction G 
in calculating the net wealth of the assessee. As a "conse<1uence of the 
answer given to the first question, the second question was answered by 
saying that Section 17 of the The Wealth Tax Act could not be applied 

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