KESORAM INDUSTRIES & COTTON MILLS LTD. vs COMNMISSIONER OF WEALTH TAX, (CENTRAL) CALCUTTA

The Supreme Court held that under Section 7 of the Wealth Tax Act, 1957, the Wealth Tax Officer is justified in accepting the valuation of fixed assets as shown in the balance-sheet on the valuation date. The proposed dividend by the directors was not considered a debt owed by the company on the valuation date, thus not deductible under Section 2(m). However, the liability to pay tax is a debt that arose on the valuation date and is deductible in computing net wealth under Section 2(m). The Court upheld the decisions of the lower authorities regarding asset valuation and dividend treatment.