Income Tax Appellate Tribunal - Mumbai
Wealth-Tax Officer vs A. A. Heptulla on 8 February, 1996
Equivalent citations: [1982]1ITD28(MUM)
ORDER
Shri K.B. Menon, Judicial Member
1. These appeals by the department relate to the assessment years 1971-72, 1972-73, 1973-74, 1974-75 and 1975-76. The relevant valuation dates were samvat years 2026 to 2030, respectively.
2. The only ground taken by the department which is common to all the appeals is that the AAC erred in holding that the mahr amount said to have been agreed to be paid at the time of marriage and later increased by an entry dated 10-6-1974 in the Nikahnama is a debt owed by the assessee and directing the WTO to deduct the same from the assessee's total net wealth.
3. Before the WTO, the assessee had claimed deduction of Rs. 2 lakhs being the mahr amount due from the assessee to his wife, as a liability while computing the taxable wealth. The assessee and his wife were married on 7-12-1966. An agreement executed between the assessee and his wife dated 21-12-1966 shows that at the time of marriage a prompt mahr of Rs. 1 lakh was fixed as consideration for the marriage and that the mahr was increased from Rs. 1 lakh to Rs. 2 lakhs by this agreement. Another agreement executed by the parties on 31-7-1975 confirmed the agreement dated 21-12-1966. It was stated in the later agreement that the earlier agreement was by oversight not registered. The increase of the mahr from Rs. 1 lakh to Rs. 2 lakhs was entered in the Nikah Form of the Office of the Quazi under the Masjid Committee, Bhopal. It is on the above basis that the assessee claimed deduction of Rs. 2 lakhs as a liability. The claim was disallowed by the ITO on the ground that the mahr is payable only when a demand is made by the wife of the assessee, that no evidence has been adduced to show that any such demand has been made and that till the demand is made, there cannot be said to be any liability for the amount.
4. The Commissioner (Appeals) relying upon paragraph 295 of Mulla's Principles of Mohammedan Law (17th edition), held that the mahr amount ranks as a debt on the death of a Muslim law and that the increase of the mahr amount was also permitted by Muslim law and that the whole mahr amount of Rs. 2 lakhs is therefore, to be deducted as a liability in computing the net wealth. The department now questions the correctness of this finding.
5. It was contended by the learned departmental representative that in the absence of proof regarding a demand by the wife, the mahr amount cannot be said to have become payable and that the same cannot, therefore, be treated as a liability. On the other hand, the learned counsel for the assessee contended that the mahr amount is a liability and has, therefore, to be deducted in computing the net wealth. It was also contended by the learned counsel for the assessee in the present case that there was a demand by the wife for payment of the amount. In support of the same, he relied upon a letter written by the assessee to the WTO stating that the wife had demanded payment of the amount. There was an endorsement at the foot of the letter by the wife confirming that she had demanded the amount. No reference is seen made by the WTO to this letter. We were not also impressed by this letter which is undated and which does not say when the demand was made. Even treating the letter as evidence of a demand having been made, it is not known when the demand was made. It is not, therefore, possible to place any reliance on this letter. We, therefore, agree with the WTO that there is no evidence of any demand having been made.
6. But on an examination of the matter, we are of the opinion that a demand for payment of the amount is not necessary constitute the liability into a debt. Under clause (m) of section 2 all the debts owed by the assessee have to be deducted for computing the net wealth. The scope of the expression "debts owed" has been considered by the Supreme Court in Kesoram Industries and Cotton Mills Ltd. v. CWT [1966] 59 ITR 767. The ruling of the Supreme Court is to the following effect :
A distinction must be borne in mind between the case where there is an existing debt, payment whereof is deferred and a case where both the dents and its payment rest in future. In the former case there is an attachable debt and in the latter case there is not. If the amount is payable on the happening of a contingency, there is no debt owing or accruing. A sum of money which is now payable or will become payable in future by reason of a present obligation, is a debt. A sum of money which is certainly and in all event payable is a debt without regard to the fact whether it is payable now or at a future time. The expression "debt owed" in section 2(m) can be defined as the liability to pay in present or in future an ascertainable sum of money. Keeping these principles in mind, the nature of the mahr amount as set out in Chapter XV of Mulla's Mohammedan Law, referred to earlier, any be examined. The mahr or doweris a sum of money or property which the wife is entitled to recrive from the husband in consideration of the marriage (para 285). It can be fixed either before or at the time of the marriage or after marriage and can also be increased after marriage (para 287). The amount of dower is usually split into two parts, one called "prompt", which is payable on demand and the other called "deferred" which is payable on dissolution of marriage (para 290). The wife may remit the dower or any part thereof in favour of the husband or his heirs even without consideration (para 291). The dower ranks as a debt and the widow is entitled along with other creditors of her deceased husband to have it satisfied on his death out of his estate. (para 295)
7. It is clear from what is stated above that the mahr amount will be a liability from the time when the amount was determined. The making of the demand only determines the time for payment of the amount. But the liability is always there. It is to be treated as a debt on the death of the husband even if no demand had been made by the wife. The amount, therefore, constitutes a liability and in the light of the ruling of the Supreme Court, referred to above, it clearly constitutes a debt owed by the assessee. In the present case, the agreement dated 21-12-1966 clearly shows that the amount of Rs. 1 lakh originally determined was prompt mahr and it was this amount which was subsequently enhanced to Rs. 2 lakhs. The amount clearly to convert the same into a debt. It also appears that it will make no difference even if the dower was a deferred one because it will definitely be payable on the dissolution of the marriage by death or marriage, one of which is sure to happen. It also appears that the fact that the wife can remit the amount will not affect the position because in the case of other debts also, the creditor can always remit the claim. We, therefore, hold that the mahr amount is a debt which has to be deducted in computing the net wealth.
8. Coming to the quantum of the amount, it is clearly established that the mahr originally determined was Rs. 1 lakh and in view of the finding above, this amount has definitely to be deducted as a debt. With regard to the enhancement of the amount, it appears to us that some more investigation is necessary. The amount is claimed to have been enhanced by the agreement dated 21-12-1966. But the agreement dated 2-8-1975, which purports to be one confirming the agreement dated 21-12-1966, shows that the earlier agreement has not been registered. It has, therefore, to be investigated when the earlier agreement actually come into effect. The copy of the Nikah Form does not indicate whether the enhancement of the amount was entered in the Nikah Form maintained by the Masjid Committee and, if so, from what date. This also will have to be investigated. We would, therefore, remit the matter to the Commissioner (Appeals) for the limited purpose of ascertaining the date from which the enhancement of the mahr came into effect and for treating the enhanced amount as a debt from the date from which the enhancement became effective. Ordered accordingly.
9. In the result, the order of the Commissioner (Appeals) is confirmed with regard to Rs. 1 lakh and with regard to the enhancement of the mahr by another Rs. 1 lakh, the matter is remitted to the Commissioner (Appeals) for fresh disposal in accordance with law and in the light of the directions above. The appeals will be treated as allowed in part for statistical purposes.