BISHWESHWARILAL CHIRAWALA Vs. COMMISSIONER OF WEALTH TAX

JUDGEMENT

(1.) THE question of law referred to this Court by the Tribunal at the instance of the assessee in this case is :

(2.) IT is common ground that the loan obtained by the assessee in this case is on the security of National Defence Gold Bonds which are wholly exempt under S. 5(1)(xvia) of the WT Act. The question raised herein is, thus, a question similar to the question where a loan was obtained on the security of life insurance policies. For the reasons given in our judgment of this date in WT Ref. No. 113 of 1976 (CWT vs. Vasant Kumar Govindji Kotak (1990) 186 ITR 91), we hold that the loan obtained by the assessee herein is on the security of property which is totally not chargeable to wealth tax at all and the loan is, therefore, squarely hit by the provisions of S. 2 (m) (ii).

(3.) WHAT is required to be seen is whether the debt/loan is secured on a property (gold bonds in this case) which is not chargeable to wealth tax. In the event the answer is in the affirmative, it must follow that the debt/loan cannot be allowed as a debt/ loan under S. 2 (m) (ii). Accordingly, we answer the question in the negative and in favour of the Revenue. No order as to costs.