# BURMA OIL CO. (I) TRADING .LTD. CALCUTTA v. COMMISSIONER OF WEALTH TAX (CENTRAL) CALCUTTA

- **Citation:** [1977] 2 S.C.R. 295
- **Court:** Supreme Court of India
- **Decided:** 1977
- **Case number:** Civil Appeal No. 71 of 1972
- **Bench:** H. R. Khanna, v. R. KRISHNA IYER
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/burma-oil-co-i-trading-ltd-calcutta-v-commissioner-of-wealth-tax-central-7037
- **Pages:** 2

## Headnote

B
Wealth Tax Act 1957-Sec. 2(m )-Whether provision for tax liability is u ·
·debt deductible in computing wealth.
·
The appellant made a provision for a sum of Rs. 49,19,520/- in his books
of account for the discharge of its tax liabilities. The appellant claimed deduction of the said amount for computation of his net wealth on the ground that
it was a debt owed by the assessee within the meaning of s. 2(m) of the Wealth
Tax Act. The claim was disallowed by the Wealth Tax Officer, the Appellate
C
Asstt. Commissioner of Wealth Tax and the Tribunal. The High Court
of
Calcutta answered the reference in favour of the revenue and against the assessee
relying on its earlier decision in the case of Assam Oil Co. Ltd.
Allowing the appeal by certificate,
HELD : This Court has reversed the decision of Calcutta High Court in the
·case of Assam Oil Co. Ltd.
In that case this Court held by majority that the
amount set apart by an assessee in his balance sheet on.the valuation date as an
D
estimated provision for meeting its tax liability less the last instalment of the
payment of the advance tax was a debt owed by the assessee within the meaning
of s. 2(m) of the Wealth Tax Act, 1957 and was deductible in computing its
net wealth as on that date.
The Court followed the said 'decision. [296C-GJ
Assam Oil Co. v. Commissioner of Wealth Tax, Central Calcutta, 60 I.T.R.
267 followed.
.
1,,,

## Text

•
295
BURMA OIL CO. (I) TRADING .LTD. CALCUTTA
v.
COMMISSIONER OF WEALTH TAX (CENTRAL) CALCUTTA
December l, 1976
A
[H. R. KHANNA AND v. R. KRISHNA IYER, JJ.]
B
Wealth Tax Act 1957-Sec. 2(m )-Whether provision for tax liability is u ·
·debt deductible in computing wealth.
·
The appellant made a provision for a sum of Rs. 49,19,520/- in his books
of account for the discharge of its tax liabilities. The appellant claimed deduction of the said amount for computation of his net wealth on the ground that
it was a debt owed by the assessee within the meaning of s. 2(m) of the Wealth
Tax Act. The claim was disallowed by the Wealth Tax Officer, the Appellate
C
Asstt. Commissioner of Wealth Tax and the Tribunal. The High Court
of
Calcutta answered the reference in favour of the revenue and against the assessee
relying on its earlier decision in the case of Assam Oil Co. Ltd.
Allowing the appeal by certificate,
HELD : This Court has reversed the decision of Calcutta High Court in the
·case of Assam Oil Co. Ltd.
In that case this Court held by majority that the
amount set apart by an assessee in his balance sheet on.the valuation date as an
D
estimated provision for meeting its tax liability less the last instalment of the
payment of the advance tax was a debt owed by the assessee within the meaning
of s. 2(m) of the Wealth Tax Act, 1957 and was deductible in computing its
net wealth as on that date.
The Court followed the said 'decision. [296C-GJ
Assam Oil Co. v. Commissioner of Wealth Tax, Central Calcutta, 60 I.T.R.
267 followed.
.
1,,,
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 71 of 1972.
E
(From the Judgment and Order dated the 18th December, 1964
-0f the Calcutta High Court in Matter No. 199/61).
T. A. Ramachandran and D. N. Gupta, for the appellant.
B. B. Ahuja and R. N. Sachthey, for respondent.
The Judgment of the Court was delivered by
KHANNA, J. This appeal on certificate is against the judgment of
the Calcutta High Court whereby the High Court answered the following question referred to it under section 27 of the Wealth Tax Act in·
favour of the revenue and against the assessee-appellant :
"Whether on the facts and in the circumstances of the
case, the provision of Rs. 49,19,520/- made by the assessee
for its tax liability less the amount of the last instalment, of
advance tax constituted a debt owed by the assessee within the
meaning of clause (m) of section 2 of the Wealth Tax Act on
the relevant valuation date ?"
The matter relates to the assessment. year 1958-59,
the relevant
valuation date for which was December 31, 1957. A sum of Rs.
49,19,520/- was provided for in the books of the appellant for the dis3-1546 SCI /76
F
G
H
A
B
c
D
E
296
SUPREME COURT REPORTS
[1977] 2 s.c.R.
charge of its tax liabilities. The appellant claimed the amount as a deduction in the computation of the net wealth. The claim was disallowed
by the wealth tax officer, the Appellate Assistant Commissioner of
Weal~ Tax and the Tribunal .. On an application filed by the appellant,
the Tnbunal referred the question reproduced above to the High Court.
The High Court, while answering the question in favour of the revenue and against the assessee-appellant, relied upon its 1~arlier decision
in the case of Assam Oil Co. Ltd. v. Commissioner of Wealth Tax,
Central Calcutta(1).
The decision in the case of Assam Oil Co. Ltd. relied upon by the
High Court was reversed on appeal by this Court. Naturally therefore
at the hearing of the appeal, Mr. Ramachandran, learned counsel for
the appellant, has drawn our attention to that decision of this Court in
the case of Assam Oil Co. v. Commissioner of Wealth Tax, Central
Calcutta( 2 ). It was held in that ca§e by majority that the amount set
apart by the appellant-company in its balance-sheet as on December
31, 1956 as an estimated provision for meeting its tax liability, less the
last instalment of the demand of the advance tax, was a debt owed by
the appellant company on December 31, 1956, the relevant valuation
date, within the meaning of section 2(m) of the Wealth Tax Act, 1957,
and was deductible in computing its net wealth as on that date. Following that decision, we are of the view that the answer to the question referred by the Tribunal to the High Court should be in lthe affirmative
in favour of the assessee-appellant and against the revenue. Mr. Ahuja
submits that the view taken by the majority in the case of Assam Oil
Co. Ltd. needs reconsideration. This Bench, however, is bound by that
decision. Following that decision, we accept the appeal, set aside the
judgment of the High Court and answer the question referred by the
Tribunal in the affirmative in favour of the assessee-appellant and
against the revenue. The parties in the circumstances shall bear their
own costs of this Court as well as of the High Court.
P.H.P.
(I) 48 l.T.R. 49.
(2) 60 l.T.R. 267.
Appeal allowed.