AHMED IBRAHIM SAHIGRA DHORAJI vs COMMISSIONER OF WEALTH TAX, GUJARAT

The Supreme Court held that the income tax paid by the assessee under Section 68 of the Finance Act, 1965, on voluntarily disclosed income is an allowable deduction as a 'debt owed' under Section 2(m) of the Wealth Tax Act, 1957. The Court clarified that the amounts disclosed did not cease to be income not already charged to income tax, and the Finance Act's provisions did not create a new liability but rather facilitated the taxation of previously unaccounted income. The High Court's ruling in favor of the Revenue was overturned, allowing the assessee's appeal for the deduction claim.