- (1.) The order of the Deputy Commissioner (Appeals) dated 3rd April, 1989 relating to the assessment year 1984-85 is being questioned on the following ground : 1. That the learned Dy. CIT (A) erred in law and on facts in directing the assessing officer to allow entire liability of Rs. 42,096 against the assessees wealth including house property for the assessment year under consideration, following the decision of Honble Madras High Court in the case of CIT v. M. N. Rajam, 1982 133 ITR 75, which is not applicable to the facts of the present case and he should at best have directed for the allowance of the debt on proportionate basis. 2. That the order of the learned Dy. CIT (A) being erroneous in law and on facts deserves to be vacated and the order of the WTO deserves to be restored".
(2.) The assessee, by status an individual, had borrowed funds from M/s Usnakmal Mool Chand and had invested the amount in the construction of a house property. The value of the house property was taken by the WTO at Rs. 2,18,081. Exemption u/s 5(1)(iv) of the Wealth-tax Act was allowed in respect of the house property to the extent of Rs. 1 lakh. It appears that the assessee had claimed liability on account of the loan of Rs. 42,096, which amount was borrowed from the above mentioned firm and was invested in the construction of the house property. This claim was not accepted by the WTO. In the assessment order, he specified no reason for disallowing the assessees claim.
(3.) The assessee appealed before the Deputy Commissioner (Appeals). The Deputy Commissioner (Appeals) was of the opinion that since Rs. 1,18,081 is includible as wealth, the liability on account of the loan of Rs. 42,096 is not hit by the prohibition and the entire loan is deductible from the assessees wealth as there was a nexus between the said liability and the house property. In taking this view, he drew support from CIT v. M. N. Rajam, 1982 133 ITR 75. He, therefore, directed the Wealth-tax Officer to allow the entire liability of Rs. 42,096. Dissatisfied by that order, the Revenue is in appeal before the Tribunal.;