COMMISSIONER OF WEALTH TAX Vs. PREMNARAYAN GARG

JUDGEMENT

(1.) THIS is a reference under S. 27(1) of the WT Act, 1957 (for short, hereinafter referred to as "the Act") at the instance of the Department. The question referred for our answer reads as under:

(2.) THE assessee had obtained a loan of Rs. 41,588 from the LIC of India against his life insurance policies and invested the same in his business. The assessee, claimed deduction of this amount of loan as a debt under S. 2(m) of the Act from the total wealth on the ground that it was invested in the business of the assessee to acquire taxable assets. The WTO negatived the contention of the assessee relying on S. 2(m)(ii) of the Act. On appeal by the assessee before the AAC, the order of the WTO was reversed holding that it was deductible as a debt. This view of the AAC has been upheld by the Tribunal in the appeal by the Department holding that S. 2(m)(ii) of the Act was not attracted. As is evident from the question and also from the statement of the case, it is an undisputed position that the loan in question was obtained on the security of the life insurance policies of the assessee.

(3.) IN the result, we answer the question in the negative, that is, in favour of the Department and against the assessee.