THE COMMISSIONER OF WEALTH TAX, CENTRAL, KARACHI Versus MST. NOOR BAI IBRAHIM

SAEEDUZZAMAN SIDDIQUI, J .-- The following question has been referred to this Court for decision under section 27(1) of the Wealth Tax-Act.

"Whether on the facts and circumstances of the case, the Appellate Tribunal was right, in holding, that the tax liability in respect of the assessment year' 1972-73 is to be excluded under section 2(m) of the Wealth Tax Act for the 'purpose of computing the, net wealth liable for wealth tax for that very year?

2. The, admitted position in the case, is that the respondent in her return for the assessment year 1972-73 had shown certain amount payable as wealth tax for the purposes of deduction under section 2(m) of the Wealth Tax Act, to compute her net wealth. The Wealth Tax Officer disallowed the deduction holding that the amount of tax liability is not a debt owed by the assessee within the meaning of the Wealth Tax` Act. However on appeal the Appellate Tribunal reversed the order of Wealth Tax Officer and allowed deduction of this amount as a debt owed by the assessee under section 2(m) of the Wealth Tax Act.

3. Mr. Nasrullah Awan, the learned counsel for the Department/ petitioner contends that the amounts shown as Payable towards wealth tax for the assessment year in dispute could not fall within the definition of a debt owed' and as such the same could be deducted from the gross wealth under section (2) of the Wealth Tax Act, 1963. After hearing the learned counsel for the petitioner and the learned counsel for the respondent 'We are of he view that the Appellate Tribunal rightly allowed deduction of the amounts shown by the assessee in their return as the wealth tax payable for the assessment year 1972-73 from the estimated value of the assets for the purposes of computation of net wealth under section 2(m) of the Wealth 'tax" Act: The Appellate tribunal in its order has referred to the case of Commissioner Wealth Tax, Lahore v. Mst. Fozia Mugheez (1975) 82 Taxation, page 1 and the learned counsel for the responded has also invited our attention to another case decided by 'D.B. of this' Court reported as Commissioner of Wealth Tax, Centre "Karachi v. Paracha Textile Mills Ltd. 1983 PTD 335 In both the above cases it has been held that the amount' earmarked in the return, as the income-tax liability is a "debt owed which is adjustable out of the gross wealth within the scope of section 2(m) of the Wealth Tax Act." If the amount shorn' as the 'liability of Income-tax could be allowed as a 'debt owed' for adjustment from the gross wealth under section 2(m) of the Act for the purposes of computation of net wealth of assessee, we do not see any reason to disallow the amount shown as a liability of wealth tax under the Wealth Tax Act as a 'debt owed' within the meaning of that section 2(m). We are in respectful agreement with the reasoning given in the above cases and accordingly answer the question referred to its in the affirmative. 'There' will be no order as to costs.

M.B.A . / C-49/ K Question answered in the affirmative.