JUDGMENT Pathak, J.
1. The Appellate Tribunal has referred the following question :
" Whether, in computing the net wealth of the assessee for the assessment years 1957-58, 1958-59 and 1959-60, the amount of the provision for payment of income-tax and super-tax in respect of assessments not completed till the respective valuation dates was deductible ? "
2. In assessment proceedings under the Wealth-tax Act for the assessment years 1957-58, 1958-69 and 1959-60, the assessee claimed that an amount provided by it on account of income-tax and super-tax apprehended for a period prior to the date of valuation should be treated as a debt owed by the assessee on the respective valuation dates and that, therefore, the said amounts should be deducted from the valuation of the assets in computing the net wealth of the assessee. The claim was rejected by the Wealth-tax Officer and thereafter, on appeal by the Appellate Assistant Commissioner of Wealth-tax. The Appellate Tribunal, on second appeal by the assessee, also rejected the claim. At the instance of the assessee, this reference has now been made.
3. It is now settled law in view of the decision of the Supreme Court in Kesoram Industries and Cotton Mills Ltd. v. Commissioner of Wealth-tax, [1966] 59 I.T.R. 767 ; [1966] 2 S.C.R. 688 (S.C.), that in order to consider whether a tax liability should be taken as a debt owed for the purposes of computing the net wealth as defined in Section 2(m) of the Wealth-tax Act, all that is necessary is that the tax liability should have accrued and that, it is not imperative that it should also have been quantified by an assessment order. In this view of the matter it is plain that the Appellate Tribunal has erred in the view which it took. The assessee was entitled to have the tax liability, in respect of which it had made provision, treated as a " debt owed ".
4. It is then urged on behalf of the Commissioner that the claim of the assessee is liable to be rejected in view of the provisions of Section 2(m)(iii)(b) inasmuch as in each case the tax was outstanding for a period of more than twelve months on the valuation date. In the first place, there is nothing on the record before us to indicate that the tax liability was indeed outstanding for that period. But, apart from that, it is clear upon the language of the statutory provision that the contention is without substance.
5. Section 2(m)(iii)(b) of the Wealth-tax Act defines " net wealth " as " The amount by which the aggregate value .... of all the assets, wherever located belonging to the assessee on the valuation date..... is in excess of the aggregate value of all the debts owed by the assessee on the valuation date other than ,--...
(iii) the amount of the tax, . . . payable in consequents of any order passed under or in pursuance of ... any law relating to taxation of income or profits,. . .
(b) which, although not claimed by the assessee as not being payable by him, is nevertheless outstanding for a period of more than twelve months on the valuation date. "
6. When determining the net wealth of an assessee it is necessary to compute the aggregate value of his assets and the aggregate value of the debts owed by him, and the excess of the aggregate value of his assets over the aggregate value of the debts represents the net wealth of the assessee. In computing the aggregate value of the debts owed by the assessee on the valuation date, Parliament has excluded from consideration three classes of debts. One class includes the amount of tax payable in consequence of an order passed under a law relating to taxation of income or profits which, although not claimed by the assessee as not being payable by him, is nevertheless outstanding for more than twelve months on the valuation date. The Indian Income-tax Act, 1922, is a law relating to the taxation of income or profits. There must be an order passed under or in pursuance of that Act requiring the payment of tax. Tax becomes payable when an assessment order is made. Here, admittedly, the assessment proceedings in each case had not concluded and no assessment order had been made on any of the valuation dates. Consequently, the clause of exception embodied in Section 2(m)(iii)(b) is not attracted.
7. Accordingly, we answer the question referred in the affirmative and in favour of the assessee. The assessee is entitled to his costs which we assess at Rs. 200. Counsel's fee is assessed in the same figure.