9911796707
TMI Blog1996 (4) TMI 7X X X X Extracts X X X X X X X X Extracts X X X X ..... f Wards on September 16, 1941. The estate was released on February 16, 1953. All the proceedings pursuant to the application before the special judge after the death of Ram Gopal Singh went on in the name of the assessee. Out of the savings of the estate, the Court of Wards invested an amount of Rs. 6,11,324 in Government securities. The investment fetched an income of Rs. 76,000 per annum by way of interest. The amount of interest used to be collected by the assessee. In the proceedings under the Uttar Pradesh Encumbered Estates Act, the special judge passed a simple money decree for Rs. 30,00,000 and odd. Since the assessee had been substituted in the place of his father, the decree was passed against the assessee. When some of the dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... completed by the Wealth-tax Officer for the aforesaid years of assessment holding that since the decretal amount of Rs. 30,00,000 could not be recovered from the assessee personally, it was not a debt owed by the assessee. The sum of Rs. 6,78,000 constituted the net wealth of the assessee against which the decretal amount could not be set off. Similar orders were passed for the assessment years 1960-61 and 1961-62. The assessee appealed to the Appellate Assistant Commissioner who examined the facts of the case in depth and dismissed the appeals by a consolidated order disposing of all the five cases. One of the points taken before the Appellate Assistant Commissioner was that the assessee had a pious obligation to discharge the debts cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be said that no decree was passed against the assessee personally. The Tribunal rejected all these arguments. The Tribunal held that in order to get any deduction of any amount on "debt owed" by the assessee, it will have to be shown that he was personally liable to pay the debts. In a case where a person was liable to pay debts only to the extent of property which he had received from another person, there could be no personal liability to pay the tax. The creditors could proceed against the assets and recover their dues from the assets of the deceased. But the creditors could not enforce their claim against the assessee personally or against the personal assets of the assessee. Since the creditors could not proceed against the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om his father were "debts owed by the assessee". The High Court, therefore, answered the first question by holding that the debt amount to Rs. 30,00,000 and odd should have been allowed as a deduction in calculating the net wealth of the assessee. As a consequence of the answer given to the first question, the second question was answered by saying that section 17 of the Wealth-tax Act could not be applied for the assessment years 1957-58, 1958-59 and 1959-60. We fail to see how the High Court went into the question of pious obligation of a Hindu son for payment of his father's debt. This question was given up before the Tribunal and no argument was advanced on this point. Moreover, the High Court noted that the assessee's liability to pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... present liability to pay an ascertainable amount in futuro. Therefore, it came within the meaning of the phrase "debts owed" in section 2(m) of the Wealth-tax Act on the valuation date. This decision does not come to the aid of the assessee in any way. Under the Wealth-tax Act, "net wealth" has been defined as under : " 2.(m) 'net wealth' means the amount by which the aggregate value computed in accordance with the provisions of this Act of all the assets, wherever located, belonging to the assessee on the valuation date, including assets required to be included in his net wealth as on that date under this Act, is in excess of the aggregate value of all the debts owed by the assessee on the valuation date which have been incurred in rela ..... X X X X Extracts X X X X X X X X Extracts X X X X
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