D. BASAPPA Vs. COMMISSIONER OF WEALTH-TAX

JUDGEMENT

(1.) IN this reference under section 27(1) of the Wealth -tax Act, 1957 (Central Act No. 27 of 1957) ("the Act"), the Income Tax Appellate Tribunal, Bangalore Bench ("Tribunal"), at the instance of the assessee has referred the following question of law for the opinion of this court :

(2.) IN order to appreciate the question of law referred to us, it is necessary to notice the facts of the case in the first instance. The assessee is a Hindu undivided family ("HUF"). For the assessment year 1974 -75, relevant to the valuation date March 31, 1974, the assessee filed his return under the Act before the Wealth -tax Officer, Mercara ("WTO"), inter alia, claiming a sum of Rs. 1,69,950 "as a debt owed by him" being the amount borrowed from the Life Insurance Corporation of India on a life insurance policy issued by that Corporation. On an examination of the return filed by the assessee, the Wealth -tax Officer completed his assessment on June 10, 1975, disallowing the said sum of Rs. 1,69,950 with which the appellate authorities have concurred by dismissing the appeals filed by the assessee under the Act. Hence, this reference at the instance of the assessee.

(3.) SRI K. Srinivasan, learned senior standing counsel for the Income Tax Department, appearing for the Revenue, in urging to answer the question in favour of the Revenue contends that the sum owed by the assessee was a debt owed in relation to an exempted wealth and was not an allowable deduction because of section 2(m)(ii) of the Act. In support of his contention, Sri Srinivasan strongly relies on the rulings of the High Courts of Allahabad, Madras, Gujarat and Madhya Pradesh reported in (i) JIWAN LAL VIRMANI Vs. COMMISSIONER OF WEALTH -TAX, U. P., (1967) 66 ITR 338 All ; (ii) T.V. Srinivasan Vs. Commissioner of Wealth -tax, (1980) 123 ITR 464 Mad ; (iii) APOORVA SHANTILAL (HUF) (WTR NO. 7 OF 1980) ARUN K. PARIKH (WTR NO. 19 OF 1980) ASHOK K. PARIKH (WTR NO. 20 OF 1980) AJIT K. PARIKH (WTR NO. 21 OF 1980) SMT. KAMAL K. PARIKH (WTR NO. 26 OF 1980) Vs. COMMISSIONER OF WEALTH -TAX., (1982) 135 ITR 182 Guj and Commissioner of Wealth -tax Vs. Narayandas J. Hemani, (1983) 143 ITR 87 MP , respectively.