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TMI Blog1966 (3) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... ear 1957-58 for which the relevant valuation date was March 31, 1957. The total wealth admitted was Rs. 11,36,378. The Wealth-tax Officer, however, computed the total net wealth of the assessee at Rs. 16,45,509. In doing so, the Wealth-tax Officer included a sum of Rs. 4,40,400 in the total wealth overruling the objections of the assessee. The present reference relates to the validity of the inclusion of this amount in the total wealth of the assessee. One-half of this disputed amount, viz., 2,20,200, paid to the assessee in the shape of debentures of the Andhra Land Mortgage Bank Ltd., represented the advance payment on account of compensation under section 54A of the Madras Estates (Abolition and Conversion into Ryotwari) Act (XXVI of 1948). The other half was the probable amount of balance compensation which was yet to be ascertained and paid to the assessee-landholder under section 39 of the Act XXVI of 1948. Regarding the advance payment on account of compensation under section 54A of Act XXVI of 1948, the assessee contended that as the Chemudu estate taken over by the Government under the Act consisted of agricultural lands, the amount paid as part compensation must be held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see and the department agreed that the question referred is not correctly worded and desired us to recast it. We have accordingly framed the question as follows : " Whether the Wealth-tax Officer was justified in including in the total wealth of the assessee a sum of Rs. 2,20,200 being the advance payment already made on account of compensation under section 54A of the Madras Estates (Abolition and Conversion into Ryotwari) Act (XXVI of 1948) and another sum of Rs. 2,20,200 being the probable amount of balance compensation to be ascertained and paid in the future ? " Mr. Kuppuswamy, the learned counsel for the assessee, has not contended before us that the advance amount of Rs. 2,20,200 already paid to the assessee should not be included in the total wealth of the assessee. Nor has he pressed the contention that the amount of compensation paid or payable to the assessee under the Act XXVI of 1948 must be treated as representing agricultural land and therefore excluded from consideration. He also stated that it is unnecessary in this reference to advance the argument that the amount of compensation already received or yet to be received by the assessee will be impressed with the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t legal position. In Webb v. Stenton a garnishee order was issued under Order XLV, rule 2 of the Supreme Court Rules, at the instance of the judgment-creditor, attaching the judgment-debtor's share in the income in the hands of the trustees. The judgment-debtor was entitled for his life to the income arising from a fund vested in the trustees. The annual income from the fund was payable to the judgment-debtor in two half-yearly instalments in February and August. The garnishee order was issued in November. The trustees contended that in November there was no money in their hands which can be said to be due to the judgment-debtor and that therefore the garnishee order served on them was unsustainable. The question that arose for consideration was whether there was a " debt " owing or accruing to the judgment-debtor at the time of the garnishee order. Lindley L. J. said : " A debt is a sum of money which is now payable or will become payable in the future by reason of a present obligation, debitum in praesenti, solvendum in futuro. " Fry L. J. observed at page 528 : " I have further no doubt that the word 'indebted' describes the condition of a person when there is a present d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to deal with the question as to the point of time when managing agency commission became payable to the managing agents of a company. In the course of his judgment Bhagwati J. stated thus : " If the assessee acquires a right to receive the income, the income can be said to have accrued to him though it may be received later on its being ascertained. The basic conception is that he must have acquired a right to receive the income. There must be a debt owed to him by somebody. There must be as is otherwise expressed debitum in praesenti, solvendum in futuro : see W. S. Try Ltd. v. Johnson and Webb v. Stenton. " It is needless to cite more decisions on this point which appears to us to be well settled. The contention of Mr. Kuppuswamy that it is only debitum in praesenti, solvendum in praesenti that can be regarded in the eye of law as a debt cannot therefore be accepted. A payment to be made in the future on account of an existing obligation is as much a debt as a payment to be made in praesenti on account of a liability in praesenti. We shall now deal with the other argument of Mr. Kuppuswamy that it is only a present liability to pay an ascertained sum of money that can constit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essing the damages and judgment is given. Here there is a debt, uncertain in amount, which will become certain when the accounts are finally dealt with by the insurance committee. Therefore, there was a 'debt' at the material date, though it was not presently payable and the amount was not ascertained. It is not like a case where there is a mere probability of a debt, as, for instance, where a erson has to serve for a fixed period before being entitled to any salary, and he has served part of that period at the time the garnishee order nisi is served . . . " Phillimore L.J., dealing with the argument that the amount was not ascertained at the time the garnishee order nisi was served, observed : " No doubt these debts were not presently payable, and the amounts were not, on April 9, 1914, ascertained in the sense that no one could say what the result of the calculations would be, but it was certain on that date that a payment would become due from the committee to the doctors out of the balance of the moneys in the hands of the committee for 1913 . . . " Lord Justice Bankes in his concurring judgment said : " It is well established that 'debts owing or accruing' include debts de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be an existing debt. I cannot agree with that submission . . . It appears to be clear that, under the regulation there is in such circumstances an existing debt, because there is a liability on the law society having received that money, to pay it over to the assisted person. It may be that, by reason of the regulations and by reason of certain provisions of the Act, the law society have power to deduct further sums from that money in exercise of some charge which they may have arising from the regulation, but that is merely a question of ascertaining the debt which has to be paid over to the assisted person and does not prevent that debt from being an existing debt at the material date. " These decisions are sufficient to show that if there is an existing liability, the mere circumstance that the amount payable can be ascertained or quantified only at a future date after taking certain proceedings and following certain procedures, cannot rob the existing liability of the character of " debt ". A present liability to pay a sum of money which is ascertainable only in the future constitutes a " debt " in law. It follows from the above that the balance amount of compensation which i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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