COMMISSIONER OF WEALTH TAX, MADRAS vs K. S. N. BHATT

The Supreme Court held that for the purposes of the Wealth Tax Act, a debt owed by the assessee on the valuation date depends on whether a liability has crystallized under the relevant taxing statute. Specifically, it was established that income tax liabilities crystallize on the last day of the previous year, wealth tax liabilities on the valuation date, and gift tax liabilities on the last day of the previous year. The Court allowed the appeals in part, affirming that the quantification of tax liabilities does not negate the existence of a debt owed on the valuation date, even if the assessment order is issued subsequently.