A debt is a present obligation to pay an ascertainable sum of money, whether the amount is payable in praesenti or in futuro
A debt is a present obligation to pay an ascertainable sum of money, whether the amount is payable in praesenti or in futuro, debitum in praesenti, solvendum in futuro. But a sum payable upon a contingency does not become a debt until the said, contingency has happened. A liability to pay income-tax is a present liability though it becomes payable after it is quantified in accordance with ascertainable data. Under ss. 3 and 67B of the Income-tax Act, the assessee is liable to payincometax and supper-tax on its income: ascertained during the accounting year ending with 31st March, at the. rates prescribed under the Finance Bill or the previous Finance Act, whichever is less. The tax is to be charged in accordance with, and subject to, the provisions of the Income-tax Act; but the charge win be in accordance with the rates prescribed, under the Finance Act., The primary object of the Finance Act is only to prescribe the rates so that the tax can. be charged under the Income-tax Act. Section 67B also shows that the charging section is only s. 3 of the Income-tax Act and that s. 2 of the Finance Act only gives the rates for quantifying the tax; for, s. 67B gives an alternative for quantification in the contingency of the Finance Act not being, passed on 1st April of the year. The conclusion will then flow that the tax liability at the latest will arise. on the last day of the accounting year. There is thus a prefected debt at any rate on the last day of the accounting year and not a contingent liability. The rate is always easily ascertainable. If the Finance Act is passed, it is the rate fixed by the Act; if the Finance Act has not yet been passed, it is the rate proposed in the Finance Bill pending before Parliament or the rate in force in the preceding year, whichever is more favourable to the assessee. All the ingredients of a debtare present. It is a present liability of an ascertainable amount;
Looking at the problem from the standpoint of a businessman or looking at the question from a commonsense view, one; will reasonably hold that the net wealth of an assessee, during the accounting year is the income earned by him minus the tax payable by him in respect of that income. [697 A]
Supreme Court of India
Kesoram Industries & Cotton Mills ... vs Comnmissioner Of Wealth Tax, ... on 24 November, 1965
Equivalent citations: 1966 AIR 1370, 1966 SCR (2) 688
