Sabyasachi Mukharji, J. - (1.) In this reference under Section 27(3) of the Wealth-tax Act, 1957, the following question has been referred to this court: "Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the amount provided by the assessee in its accounts for payment of pension to persons who had already retired was a debt owed by the assessee on the valuation date within the meaning of Section 2(m) of the Wealth-tax Act and was as such to be excluded from the net wealth of the assessee ? "
(2.) The reference arises out of the wealth-tax assessment made on the assessee-company for the assessment years 1957-58, 1958-59 and 1959-60, the relevant valuation dates being the last day of the calendar years 1956, 1957 and 1958. In the course of assessment proceedings before the Wealth-tax Officer the assessee's representative claimed, inter alia, that the provisions for pension as shown on the liabilities side of the balance-sheet drawn as on the above relevant valuation dates should be deducted in computing the net wealth as defined in Section 2(m) of the Wealth-tax Act, 1957, read with Section 7(2) of the said Act, which provided that in the case of an assessee carrying on business for which regular accounts were maintained, the Wealth-tax Officer might, instead of determining separately the value of each asset held by the assessee in such business, determine the net value of the assets as a whole having regard to the balance-sheet of such business-as on the valuation date and making such adjustments therein as the circumstances of the case might require. The Wealth-tax Officer, however, negatived the claim on the ground that provision for pension represented nothing but reserve, and held that it could not be considered as a debt owed by the company.
(3.) There was an appeal before the Appellate Assistant Commissioner. It was contended that amounts provided towards the pension should not have been added back by the Wealth-tax Officer. The Appellate Assistant Commissioner, however, agreed with the Wealth-tax Officer and held that making provision for pension would not create any liability in the real sense and according to him only definite and ascertained liabilities could be deducted in working out the net wealth of a company carrying on business. The assessee-company, thereafter, preferred an appeal before the Tribunal. The Tribunal in respect of this aspect of the matter observed that so far as the payment of pension was concerned the amount could be divided into three categories, namely, (a) amounts payable as pension to persons who had already retired, (b) amount payable as pension to persons who had completed 15 years of service or exceeded the age of 45 years, and (c) amount payable as pension to persons who had not completed 15 years of service. The Tribunal was of the opinion that the last two categories although comprised of wealth set apart for payment of pension, still the assessee was not to make the payment immediately and, as such, it was not a debt solvendum in praesenti. These two categories of provisions in respect of pension, therefore, according to the Tribunal, could not be excluded from the net wealth of the assessee and reliance was placed by the Tribunal on the decision of this court in the case of Kesoram Cotton Mills Ltd, v. Commissioner of Wealth-tax, [1963] 48 I.T.R. 31 (Cal.).. With regard to, however, the pension payable to persons who had already retired the Tribunal was of the opinion that this item did not remain a mere liability, but had matured into a debt which was payable in praesenti to the persons concerned. In such a view of the matter so far as the amount of pension payable to persons who had already retired from the company was concerned the Tribunal was of the opinion that this amount had to be excluded from the net wealth of the assessee. Thereafter, the aforesaid question has been referred to this court as directed by this court.;