1981 (2) TMI 37

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.... 2(m)(ii) of the Wealth-tax Act, 1957, did not apply to the loan of Rs. 41,588 obtained from the Life Insurance Corporation of India against the exempted asset, viz., LIC policies, and that the amount of Rs. 41,588 was an allowable deduction in arriving at the net wealth of the assessee ?" The relevant assessment year is 1975-76. The assessee had obtained a loan of Rs. 41,588 from the LIC of India against his life insurance policies and invested the same in his business. The assessee, claimed deduction of this amount of loan as a debt under s. 2(m) of the Act from the total wealth on the ground that it was invested in the business of the assessee to acquire taxable assets. The WTO negatived the contention of the assessee relying on s.....

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....ssessee. This section so far as relevant for the present purpose reads as under: " 5. Exemption in respect of certain assets.-(1) Subject to the provisions of sub-section (1A), wealth-tax shall not be payable by an assessee in respect of the following assets, and such assets shall not be included in the net wealth of the assessee- ...... (vi) the right or interest of the assessee in any policy of insurance before the moneys covered by the policies become due and payable to the assessee :...... " The governing expression in s. 2(m) of the Act is " all the debts owed by the assessee on the valuation date other than " and then follows the list of the categories of debts which are not to be included in the aggregate value of the debts ....