COMMISSIONER OF WEALTH TAX Vs. PIERCE LESLIE AND COMPANY LIMITED

JUDGEMENT

(1.) MESSRS. Pierce Leslie and Co., Ltd., which is a non-resident company was assessed to tax under the Wealth Tax Act, 1957 for the assessment year 1957-58. We shall refer to this company as the assesses in this judgment. It filed a return under the Act stating that its net wealth was Rs. 59,51,073. In computing this net wealth the assessee claimed as deduction a sum of Rs. 33,24,609, as a debt due and owing which ought to be taken into account in fixing the taxable value under the Act. The break up of this figure Rs. 33,24,609 was as follows :

(2.) AMOUNT of income-tax due and payable on the valuation date as per notice of demand under Section 29, Indian Income-tax Act Rs.2,56,762

(3.) DEBT is a common expression and it is difficult to believe that it can give rise to any controversy in interpreting it. Broadly stated it is a liquidated money obligation for the recovery of which an action will lie. It is an ascertained liquidated quantified obligation enforceable 'in praesenti' or 'in futuro'. A debt must be a "debitum" that is due. The fact that the time for payment will arise in future does not make it any the less a debt. 'Debitum in praesenti, solvendum in future'--this is not repugnant to the conception if a debt, because the obligation is crystallised and it is only the payability that is in abeyance, but a debt has to be distinguished from what can only be described as something which will probably or partly ripen into a debt. A future contingent liability is not a debt due and owing. It is not only not due but being contingent never may become due. An inchoate liability with a fair prospect of maturity into a debt in future and still in its embryo stage would not answer the description of a debt. Till it is born it is not a debt. Every kind of liability, immature, formative and in the course of evolution to become a debt, cannot be called a debt, in anticipation of the ultimate.