BASAPPA Vs. COMMISSIONER OF WEALTH TAX

JUDGEMENT

(1.) In this reference under Section 27(1) of the Wealth-tax Act of 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: "Whether, on the facts and in the circumstances of the case, the assessee was entitled to a deduction of Rs. 1,69,950/-representing the loan taken from the Life Insurance Corporation of India on insurance policies in view of the provisions of Section 2(m)(ii) of the Wealth Tax Act, 1957? 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.

(2.) The assesses is a Hindu Undivided Family ('HUF') For the assessment year 1974-75 relevant to the valuation date being 31-3-1974, 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 WTO completed his assessment on 10-6-1975 disallowing the said sum of Rs. 1,69,950/- with which the appellate authorities have concurred by dismissing the appeals filed by the assessed under the Act. Hence, this reference at the instance of the assessee.

(3.) Sri G. Sarangan, Learned Counsel appearing for the assessee In urging to answer the question in his favour contends that the sum of Rs. 1,69,950/-was a debt owed by the assessee in relation to his net wealth not falling within the exceptions in Section 2(m)(ii) of the Act and was an allowable deduction under the Act.