COMMISSIONER OF WEALTH TAX Vs. D.D. JHAVAR

JUDGEMENT

(1.) THIS is a reference made under section 7(1) of the Wealth -tax Act, 1957 ('the Act') for decision of this Court on the following question:

(2.) IN view of the above decision of the Tribunal, the Commissioner applied for a reference to this Court, under section 27(1) of the Act, of the above question of law for its decision. This is how the question comes for decision before us.

(3.) IN ascertaining the 'net wealth' as defined in section 2 (m), the 'debts owed' by the assessee on the valuation date are to be deducted and clause (ii) therein excludes deduction of a debt which is secured against an exempted asset. It is, therefore, clear that the assessee cannot claim deduction of a loan obtained against the security of an exempted asset treating it as a 'debt owed' for computation of the 'net wealth' in view of section 2 (m)(ii), which expressly excludes such a secured debt from the category of 'debts owed'. The further question of utilisation of such a debt is, therefore, unnecessary and the view taken by the Tribunal with reference to utilisation of the debt, therefore, cannot be upheld. Following the aforesaid decisions of this Court, the above quoted question referred for the decision of this Court is answered in the negative, as follows: