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TMI Blog1984 (4) TMI 130X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the wealth-tax liability of late Smt. Ar. Umayal Achi taken over by the assessee, and (2) of Rs. 1,04,065 being the estate duty liability of the estate of late Umayal Achi. The contention of the assessee raised and argued before us is that these liabilities are not tax liabilities consequent on any assessment made on the assessee and, therefore, they are not prohibited from deduction as debt in computing the principal value of the estate under section 2(m)(iii) of the Wealth-tax Act, 1957 ('the Act'). The learned counsel for the assessee, however, at the time of hearing of the appeal, stated that the decision of the Allahabad High Court in the case of Smt. Prem Lata Agarwal v. CWT [1983] 142 ITR 586, relied on by the Commissioner (Appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uage of section 2(m)(iii) and the ratio of the decision of the Allahabad High Court in Smt. Prem Lata Agarwal's case. But with regard to the wealth-tax liability of late Umayal Achi, according to us, the assessee is entitled to deduction of the same and the ratio of the decision of the Allahabad High Court will not be applicable. According to the decision of the Supreme Court in Kesoram Industries Cotton Mills Ltd. v. CWT [1966] 59 ITR 767, income-tax liability is a debt within the meaning of section 2(m), which an assessee owes as on the last day of the previous year notwithstanding that the liability has been quantified or determined subsequently in an assessment made on the assessee. It was, therefore, held that the tax liability was e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmination. Therefore, the liability in that case even though as of the HUF has to be regarded as a tax liability owed by the individual member, the particular assessee in that case. In our view, a liability to tax of an assessee, which does not attach to any other person either under the income-tax law or under the general law, cannot be regarded as a liability to tax hit by the provisions of section 2(m)(iii). In order that the tax liability contemplated under section 2(m)(iii) should retain the character as a tax liability, there must be, according to us, a liability in respect of the person claiming it as a deduction right from the creation thereof by the statute or under the general law, such as the liability to a firm's tax in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pay such tax in law right from the time the liability is created. It cannot obviously refer to a person who acquires the property from another assessee either by taking over the same or inheriting it after a lapse of more than a year or a number of years. In such a case he does not have opportunity to pay the liability within a year or not to dispute it. 4. In the present case the wealth-tax liability was undoubtedly related to the deceased and was a personal liability. It did not constitute a liability of the assessee on the relevant valuation date or when the assessment was made and the assessee inherited it after the death of his mother. It, therefore, ceased to have the character of a tax liability within the meaning of section 2(m)( ..... X X X X Extracts X X X X X X X X Extracts X X X X
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