JIWAN LAL VIRMANI Vs. COMMISSIONER OF WEALTH TAX

JUDGEMENT

(1.) THIS is a reference made under section 27 of the Wealth-tax Act made at the instance of an assessee whose wealth was assessed at Rs. 11,75,103 for the assessment year 1959-60. The objection which has given rise to this reference relates to a sum of Rs. 71,820 representing loans from the Life Insurance Corporation taken on the security of the life insurance policies of the assessee. The assessee, who is an individual, claimed that although this sum of money was taken ostensibly as a loan, yet, it was really an advance payment out of the right or interest of the assessee in insurance policies before the moneys covered by the policies became due and payable to the assessee. Hence, according to the assessee, the amount was exempt from the computation of net wealth as defined by section 2(m) by virtue of section 5(1)(vi) of the Wealth-tax Act, 1957 (hereinafter referred to as the Act). The department relied upon the provisions of section 2(m)(ii) of the Act. Section 2(m) of the Act may be quoted here :

(2.) IT has been held by the wealth-tax authorities right up to the tribunal that the loan of Rs. 71,820 raised on the security of the life insurance policies cannot be deducted in determining the net wealth because section 2(m)(ii) of the Act excludes debts which are secured by an asset on which wealth-tax is not payable from the debts which are to be deducted for determining net wealth.

(3.) WE, therefore, answer the question in the negative and against the assessee. WE assess the costs of this reference at Rs. 200 and the counsels fee also at Rs. 200.