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TMI Blog1999 (12) TMI 18X X X X Extracts X X X X X X X X Extracts X X X X ..... s and in the circumstances of the case, on a partial distribution of the assets and liabilities of the estate of the deceased, the assessee, legal representative could deduct the debts allotted to her share in computing her own net wealth under the Wealth-tax Act, 1957 ?" Tax Case No. 1269 of 1991 is also at the instance of the Commissioner of Wealth-tax, Tamil Nadu-I, Madras, and the Tribunal has stated a case and referred the following question of law under section 27(1) of the Act. "Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was right in law in holding that the assessee's share of liability as legal heir of the estate of his late father, had actually become due and as such is deducti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e distribution, 39,000 shares in Amalgamations Limited were distributed to the five legal heirs and each got 7,800 shares of Rs. 10 each. The share of the liabilities due by the estate was also transmitted to each of them which amounted to Rs. 4,83,702, Rs. 5,11,348 and Rs. 5,38,993 as on March 31, 1974, March 31, 1975 and March 31, 1976, respectively. The assessees in Tax Cases Nos. 1978 to 1981 of 1984 have returned the value of shares in Amalgamations Limited as "nil" and claimed deduction of the liabilities distributed to them. The Wealth-tax Officer disallowed the claim of the assessee on the ground that the liability was incurred in relation to the shares which were exempt from tax and hence not deductible under section 2(m) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after the death of the late Anantharamakrishnan and the liability could not be stated to be a liability incurred by the late Anantharamakrishnan and fastened on the legal representatives except the debt due to Higginbothams Private Limited. The Tribunal, therefore, held that the assessees are entitled to claim deduction of the liability in the computation of net wealth of the assessees and dismissed the appeals preferred by the Revenue. A similar view was taken by the Tribunal in other cases also which are the subject-matter of other tax case references before us and the Department has challenged the orders of the Tribunal and the questions of law as stated earlier have been referred to by the Tribunal for our consideration. Mr. C. V. Ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... represented the money borrowed by the executor and the debts were incurred during the course of the administration of the estate for payment of wealth-tax and gift-tax pertaining to the estate of the late Anantharamakrishnan. After determination of estate duty and payment thereof, the assets and liabilities of the estate were partially distributed among five legal heirs of the deceased and certain shares were distributed and liabilities were transmitted. We are unable to accept the submission of learned senior counsel for the Revenue that the liability fastened on the assessees can be regarded as a contingent liability as there is nothing to show that the liability was fastened on the assessees only on the happening of uncertain events i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n it be said that the obligation undertaken had no force till the condition is satisfied. We hold that none of the conditions to regard the debt as a contingent liability is present to regard the debt as a contingent liability. The next submission of learned counsel for the Revenue was that the liability is fastened to the exempted assets. We are unable to accept the submission as there is nothing to indicate that the liability was fastened or attached to the shares. It is seen that only after the shares were obtained by the late Anantharamakrishnan the debts were incurred. Hence, we find there are no materials to show any nexus or link between the shares and the liability. As rightly pointed out by the Tribunal, the executor had distribu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bothams Private Limited, other debts were incurred by the executor after the death of the late Anantharamakrishnan for the discharge of wealth-tax and gift-tax liabilities pertaining to the estate of the late Anantharamakrishnan and the liabilities were transmitted to the assessees not in the capacity of the legal representatives. As rightly observed by the Tribunal, the liabilities are not debts inherited by the assessees as legal representatives, but de hors the same. The other submission of learned senior counsel for the Revenue was that the debts claimed as deduction could not be regarded as debts of the assessees is also not acceptable as the executor has partially distributed the assets of the estate as also the liability of the est ..... X X X X Extracts X X X X X X X X Extracts X X X X
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