Wealth tax---

----Deduction---House property---Debt incurred on repairs---Debt relating to taxable wealth after allowing exemption under S.5(1)(iv) of the Indian Wealth Tax Act, 1957---Deductible

One of the assets included in the wealth of the assessee was a house property valued at Rs. 5 lakhs. A debt of Rs.62,500 was incurred on repairs an improvements to the house. At the relevant time, house property of the vale up to Rs. one lakh only was exempt under section 5(1)(iv) of the Indian Weal Tax Act, 1957. The Wealth Tax Officer did not allow any deduction on account of debt of Rs. 62,500. The Tribunal held that 4/5th of Rs.62,500 was deductible. On a reference:

Held. that the Tribunal was justified in holding that 4/5th of Rs.62,5C was deductible.

Vikram Gulati for the Assessee.

JUDGMENT

B.P. JEEVAN REDDY, CJ.---The question referred under section 27(1) of the Wealth Tax Act, 1957, is:

"Whether, on the facts and in the circumstances of the case, the del relating to the taxable wealth after allowing exemption under section 5(1)(h of the Act was allowable to the assessee?"

One of the assets included in the wealth of the assessee was a house property. It was valued at Rs.5,00;000. It was pointed out that a sum c Rs.62,500 was incurred on repairs and improvements to the said house. At the relevant time, house property its to the value of rupees one lakh only was exempt by virtue of caluse (iv) of subsection (1) of section 5 read wit subsection (l-A) thereof. In other words, only an amount of rupees on lakh was to be deducted out of the net wealth under section 5(1)(iv) of the Act.

The Income-tax Officer-did not grant any deduction on account of the said debt of Rs.62,500 against which the assessee went up in appeal to the Appellate Assistant Commissioner. His appeal was dismissed, whereupon the assessee carried the matter to the Tribunal. The Tribunal held that it would b just and lawful to allow deduction to the extent of the taxable value of the house. In other words, the Tribunal held that 4/5ths of Rs.62,506 should b deducted in the light of the definition of net wealth contained in clause (m) c section 2. On a perusal of the relevant provision of the Act, we are of the opinion that what the Tribunal has done is perfectly in accordance with the provisions of the Act, besides being just.

The question referred is, accordingly, answered in the affirmative, i.e., in favour of the assessee and against the Revenue. No costs.

M.B.A./1548/TQuestion answered