Wealth tax exemption option cannot be shifted after return filing, but loan liability for property acquisition remains deductible.

An exemption under section 5(vi) of the Wealth Tax Act, once exercised in the return, could not be shifted at the appellate stage to a different property in the absence of a valid revised return. The assessee had claimed exemption for the Shimla property and was not allowed to substitute the Aralias DLF property later. A loan taken from Citi Bank for acquiring the Aralias DLF property was, however, required to be allowed as a deductible liability in computing taxable wealth, as the borrowing was accepted on the record. The taxable wealth therefore had to be recomputed after giving effect to the loan deduction.

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Issues: (i) whether the assessee could the exemption claim under section 5(vi) of the Wealth Tax Act, 1957 from the Shimla property to the Aralias DLF property after filing the return; (ii) whether the loan taken from Citi Bank for acquiring the Aralias DLF property was deductible while computing taxable wealth.

Issue (i): whether the assessee could change the exemption claim under section 5(vi) of the Wealth Tax Act, 1957 from the Shimla property to the Aralias DLF property after filing the return.

Analysis: The return already reflected the assessee's choice of the property for exemption under section 5(vi), and no revised return was filed to substitute another property. The claimed exemption is an option available to the assessee, but once exercised in the return and not validly altered, it could not be changed at the appellate stage to shift the exemption to a different property.

Conclusion: The assessee was not entitled to substitute the Aralias DLF property for the exemption already claimed in respect of the Shimla property.

Issue (ii): whether the loan taken from Citi Bank for acquiring the Aralias DLF property was deductible while computing taxable wealth.

Analysis: The record showed that the assessee had borrowed funds from Citi Bank for acquiring the Aralias DLF property, and both sides accepted that the loan liability should be given effect in the wealth computation. The deduction had to be allowed in computing the taxable wealth.

Conclusion: The loan amount was deductible and the Assessing Officer was directed to allow the deduction.

Final Conclusion: The enhancement made by the Commissioner (Appeals) was substantially sustained, but the taxable wealth had to be recomputed after allowing deduction of the loan liability.

Ratio Decidendi: An exemption option under the Wealth Tax Act, once exercised in the return and not validly revised, cannot later be shifted to another property, but a proved loan liability incurred for acquiring the asset must be allowed in the wealth computation.

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