COMMISSIONER OF WEALTH TAX Vs. VASANTKUMAR GOVINDJI KOTAK

JUDGEMENT

(1.) THE Tribunal has, at the instance of the CIT, referred to this Court the following question of law :

(2.) THE facts are in a narrow compass and are not in dispute. The assessee owned a plot of land at Vile Parle. He constructed a house thereon during the previous year relevant to the asst. year 1970 71 by spending Rs. 1,43,789 which he withdrew from the partnership firm, M/s Vasant Kotak and Brothers, in which he was a partner. This amount appeared as a debit balance in his name in the books of the partnership firm. In the next year, the assessee, it appears, spent more amounts on the construction of the house. Like in the earlier year, the amount was also withdrawn from the partnership firm. At the end of that year, the debit balance in his name in the books of the firm stood at Rs. 1,57,489. However, the value of the said "property" as on the two valuation dates was estimated by the WTO at Rs. 1,85,000 and Rs. 1,99,000, respectively.

(3.) THEREFORE , to that extent, the debt was in relation to an asset not chargeable to wealth tax and was hit by S. 2(m)(ii) and could not be allowed as such. It was reiterated before the AAC that, even after availing of the exemption under S. 5(1)(iv) of the WT Act, "property" was charged to wealth tax in value to the extent of Rs. 85,000 for the asst. yr. 1970 71 and Rs. 99,000 for the assessment year 1971 72. The debt, it was contended, did not fall within the ambit of S. 2(m)(ii). It was pointed out that, on the valuation date relevant to the asst. yr. 1970 71, the assessee had two accounts in the books of the firm. As against the debit balance in one account, there was a credit balance of Rs. 71,467 in the other account. The AAC accepted the assessee's claim that the debt was incurred in relation to the "property" which was chargeable and charged to wealth tax and, therefore, the provisions of S. 2(m)(ii) were not applicable in the case. For the asst. year 1971 72, the AAC followed his order for the asst. year 1970 71. Agreeing with the orders of the AAC, the Tribunal dismissed the Departmental appeals. The disallowance out of the debit balance in the assessee's account in the books of the partnership firm was made by the WTO under S. 2(m)(ii) of the WT Act to the extent of the amount of exemption, i.e., Rs. 1,00,000 in both the years. The AAC and the Tribunal, on the other hand, held that the provisions of S. 2(m)(ii) were not attracted in this case. It is, therefore, necessary to refer to the provisions of S. 2(m)(ii) of the WT Act: