COMMISSIONER OF WEALTH-TAX Vs. VASANTKUMAR GOVINDJI KOTAK

JUDGEMENT

(1.) The Tribunal has, at the instance of the Commissioner, 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 assessment year 1970-71 by spending Rs. 1,43,789 which he withdrew from the partnership firm, Messrs. Vasant Kotak and Brothers, in which he was a partner. This amount appeared as a debit balance in his name is 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 Like in the earlier year, the amount was also withdrawn from the partnership firm.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 Wealth tax Offcer at Rs. 1,85,000 and Rs. 1,99,000 respectively.

(3.) The assessee claimed that the debit balance in his name in the books of the firm on the two valuation dates at Rs. 1,43,789 and Rs. 1,57,489, respectively, should be allowed as a debt in the computation of his net wealth. The Wealth-tax Officer held that the debt was incurred in relation to property the value of which was exempt to the extent of Rs. 1,00,000 under section 5(1)(iv) of the Wealth-tax Act. Therefore, to that extent, the debt was in relation to an assets not chargeable of wealth-tax and was hit by section 2(m)(ii) and could not be allowed as such.