COMMISSIONER OF WEALTH TAX KANPUR COMMISSIONER OF WEALTH TAX KANPUR Vs. J K COTTON MANUFACTURERS LIMITED :J K JUTE MILLS COMPANY LIMITED

JUDGEMENT

(1.) The only question raised in these appeals is whether the two sums of Rs. 5,40,941/- (in the case of M/s. J. K. Cotton Ltd.) and Rs. 21,61,788/-(in the case of J. K. Jute Ltd.) being the balance of the demands payable as a result of the findings and orders of the Income-tax Investigation Commission in the settlements made under the Taxation on Income (Investigation Commission) Act (30 of 1947) are deductible as debts owed by them in determining the net-wealth of these companies

(2.) The question arises in these circumstances; M/s. J. K. Cotton Manufacturers Ltd., the assessee, is a limited company engaged in the manufacture of cotton textiles. etc. and the assessment involved is the wealth-tax assessment for the year 1957-58 based on the valuation date 30-9-1956. It appears that as a result of proceedings taken and a settlement arrived at in 1952 under the Taxation on Income (Investigation Commission) Act 1947, a sum of Rs. 15,99,041/- was determined as payable by the assessee company on its secreted profits and a scheme for the payment of the said liability by instalments was laid down. Out of this, a sum of Rs. 10,50,000/- had been paid before the valuation date (30-9-1956) and Rs. 5,49,041/- remained unpaid on that date. The assessee company claimed that the balance of the demand that had remained unpaid was a debt owed by it and should be allowed as a deduction while computing its net-wealth for the concerned year of assessment (1957-58).

(3.) In the case of M/s. J. K. Jute Mills Co. Ltd. the assessment involved under the Wealth-tax Act is also for the assessment year 1957-58 but the valuation date is 31-12-1956. In the case of this company also as a result of proceedings taken and a settlement arrived at in 1952 under the Taxation on Income (Investigation Commission) Act 1947 a sum of Rs. 42,93,392/- was determined as payable by it on its secreted profits and a scheme for the payment of the said liability by instalments was laid down. Out of this, a sum of Rs. 21,31,604/-had been paid before the valuation date (31-12-1956) and Rs. 21,61,788/- remained unpaid on that date. The assessee company claimed that the balance of the demand that had remained unpaid was a debt owed by it and should be allowed as a deduction while computing its net-wealth for the concerned year of assessment (1957-58).