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Issues:
1. Entitlement to claim deduction of provision made for purchase tax in the year 1981-82 based on provisional assessment to sales tax for 1976-77. Analysis: The judgment by the High Court of Kerala involved a reference at the instance of the Revenue under section 27(3) of the Wealth-tax Act, 1957. The primary question of law referred was whether the assessee was justified in claiming a deduction for the provision made for purchase tax in the year 1981-82 based on the provisional assessment to sales tax for 1976-77. The Wealth-tax Officer disallowed the claim stating that marine products were exempted from the purchase tax during the relevant period. The Wealth-tax Commissioner (Appeals) upheld this decision. However, the Income-tax Appellate Tribunal set aside the order and directed the Wealth-tax Officer to reevaluate the issue based on the provisional sales tax assessment order for 1976-77. The Tribunal considered the timing of the liability and whether it existed during the intervening period. The court heard arguments from both the Revenue's counsel and the assessee's counsel. The Revenue's counsel cited a Supreme Court decision emphasizing that a debt owed by the assessee on the valuation date depends on whether a liability had crystallized under the relevant taxing statute at that time. The court noted that the quantification of tax liability is determined by the ultimate judicial authority, which impacts the existence of a debt owed by the assessee on the valuation date. The court distinguished the case from previous decisions cited by the respondents and clarified that the Supreme Court's decision was specifically related to the Wealth-tax Act. In conclusion, the court answered the question in the negative and against the assessee, disposing of the income-tax reference. The judgment highlighted the importance of the timing of tax liability crystallization and the impact of ultimate judicial determinations on the existence of a debt owed by the assessee on the valuation date.
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