TaxTMI 
TaxTMI 
1981 (8) TMI 53
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....ext of the provision contained in sub-cl. (ii) of cl. (m) of s. 2 of the Act. The assessee in each of these references holds a life insurance policy. He took a loan on the security of a life insurance policy. It was claimed that while computing his net wealth, this loan amount should be deducted from the aggregate value of all his assets. The wealth-tax authorities and the Tribunal negatived this claim, taking the view to the effect that as the debt in question was secured on the property in respect of which wealthtax was not chargeable, it could not be deducted from the aggregate value of the assets of the assessee under sub-cl. (ii) of cl. (m) of S. 2 of the Act. It is this view, taken by the Tribunal and the wealth-tax authorities, wh....
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....red to be included in his net wealth as on that date under this Act, is in excess of the aggregate value of all the debts owed by the assessee on the valuation date other than-... (ii) debts which are secured on, or which have been incurred in relation to, any property in respect of which wealth-tax is not chargeable under this Act; and..." Section 2(e) defines " assets ". It is an inclusive definition. Assets include property of every description, movable or immovable, except the properties specifically excluded. In the context of the aforesaid provisions and the rival contentions outlined in the next breath, we have to resolve the problem. Interest of the assessee in a policy of insurance before money covered by the policy become....
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....essee's net wealth is inescapable. Whether, the tax is chargeable or whether it is payable in respect of a property there is no distinction between the two as is sought to be urged on behalf of the assessee. The distinction, if any, is without any difference, and it overlooks the opening part of S. 3. Section 3 significantly opens with the words " Subject to the other provisions contained in this Act ". These words are deliberately used with a purpose. " Net wealth " is chargeable to wealth-tax subject to the other provisions of the Act including S. 5. In other words, chargeability to wealth-tax is subject to the provisions contained in the Act. Whether an asset is not chargeable to tax on account of its belonging to the excluded categor....
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....ng cl. (m) by the Wealth-tax (Amend.) Act, 1964, is not clear. But we do not consider that it has brought any substantial change in the provision. In substance, the provision has remained the same. We, therefore, find ourselves unable to accept the argument that the Legislature amended cl. (m) with the intention to restrict the application of cl. (ii) to debts secured on or incurred in relation to the property which was excluded from the definition of the word " assets " defined in cl. (e) of s. 2. As already pointed out above, the words " chargeable " and payable " are interchangeable in the present context, and in order to attract the application of sub-cl. (ii) what is material is whether the property on which a debt is secured or in rel....
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....ge used in sub-cl. (ii) is clear and unambiguous. Sub-clause (ii) contemplates two situations in which a debt is to be excluded from a consideration for the computation of net wealth : (i) if it is secured on a property in respect of which wealth-tax is not chargeable, or (ii) if the debt is incurred in relation to such property. Two entirely different situations were contemplated in making the above provision. A debt, though not secured, on a property in respect of which wealth-tax is not chargeable, may be incurred in relation to such property. On the other hand, a debt though not incurred in relation to a property in respect of which wealth-tax is not chargeable may be secured on such property. In either case, the debt is not deductible ....