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Issues Involved:
1. Whether the provision for taxation is liable to be allowed as a deduction under section 2(m) of the Wealth-tax Act, 1957. 2. Whether the last instalment of advance tax due under section 18A is liable to be allowed as a deduction in computation of net wealth under section 2(m) of the Wealth-tax Act. 3. Whether the value of depreciable assets as shown in the balance-sheet of the company is liable to be adjusted with reference to the written down value of such assets as per income-tax records. Detailed Analysis: 1. Provision for Taxation as Deduction: The court examined whether the sum of Rs. 11,40,755, being the provision for taxation, is liable to be allowed as a deduction under section 2(m) of the Wealth-tax Act, 1957. The court held that the liability for income tax arises by virtue of the charging section of the Income-tax Act and accrues at the end of the accounting year, even though the quantification of the amount payable is postponed until the relevant assessment year. The court emphasized that the liability to pay tax is a present obligation, and thus, it constitutes a debt owed by the assessee on the valuation date. The court concluded that the sum of Rs. 11,40,755 is liable to be allowed as a deduction. 2. Last Instalment of Advance Tax as Deduction: The court addressed whether Rs. 89,889, being the last instalment of advance tax due under section 18A as per the subsisting demand on the valuation date, though payable on March 15, 1957, is liable to be allowed as a deduction. The court held that a demand made under section 18A for advance payment of tax constitutes a debt owing on the valuation date, even though it is payable in the future. The court affirmed the decision of the Appellate Assistant Commissioner, who allowed the deduction of Rs. 89,889, recognizing it as a debt owed by the assessee on the valuation date. 3. Valuation of Depreciable Assets: The court considered whether the value of depreciable assets as shown in the balance-sheet of the company is liable to be adjusted with reference to the written down value of such assets as per income-tax records. The court held that the written down value of an asset does not necessarily represent the price it would fetch if sold in the open market on the valuation date. The Wealth-tax Officer is not obligated to adopt the written down value as the value of the asset. Instead, the officer must estimate the price the asset would fetch in the open market. The court concluded that the value of depreciable assets as shown in the balance-sheet is not liable to be adjusted with reference to the written down value as per income-tax records. Conclusion: The court answered the first question in the affirmative, allowing the deduction of the provision for taxation. The second question was also answered in the affirmative, permitting the deduction of the last instalment of advance tax. For the third question, the court concluded that the value of depreciable assets shown in the balance-sheet is not necessarily liable to be adjusted with reference to the written down value as per income-tax records. The Commissioner was ordered to pay Rs. 1,000 in costs to the respondent.
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