COMMISSIONER OF WEALTH TAX Vs. LACHMI DEVI CHOWKHANI SMT

JUDGEMENT

(1.) THESE three references arise out of common facts and circumstances and are between the same parties. We shall, therefore, dispose of them by this common order.

(2.) THE assessee, Smt. Lachmi Devi Chowkhani, is a 50% partner in the firm, Messrs. Joharmal Muralidhar & Co. that owns, amongst other business, a tea estate, known as Mahadeobari Tea Estate. THE firm did not maintain separate balance-sheet for the tea estate and other business, but maintained one consolidated balance-sheet for the years in question, namely, 1960-61 to 1967-68. It was claimed by the assessee that she had liability for agricultural income-tax and also had loans by hypothecation of tea crops, etc; that she was entitled to the deduction of her income-tax liabilities and loans on hypothecation from the assessment of net wealth. THE WTO, however, rejected her claim holding that agricultural income was debt incurred in relation to the agricultural assets which were exempt from the wealth-tax and that the provision of Section 2(m)(ii) was applicable and no deduction could be made for this liability. He also observed that the agricultural income had not been paid within one year from the date of assessment and her demand also appeared to be disputed in appeal. THE assessee appealed to the AAC of Wealth-tax, who held that agricultural income-tax was not a debt in relation to any agricultural asset and as such the provision of Section 2(m)(ii) was not applicable. He held that agricultural income-tax liability was a debt and as such an admissible deduction.

(3.) WITH regard to the loan, the assessee claimed that Rs. 2,89,154 was due to a bank (for 1966-68), and this sum should be deducted in making the assessment for wealth-tax. The WTO held that the loan is secured on the assets of the tea estate inclusive of land and growing crops. He, therefore, estimated that Rs. 1,00,000 referable to exempted assets, cannot be allowed as deduction.