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Judgment
Raghuvir, J.—In this reference, the question referred is, whether, on the facts and in the circumstances of the case, the loan of Rs. 19,486 taken from the Life Insurance Corporation against the security of the life insurance policies of the assessee was deductible in computing the net wealth of the assessee. The question was referred under the W.T. Act 1957 (Act No. XXVI of 1957).
The facts disclose that the assessee obtained a loan of Rs. 19,486 on the basis of a life insurance policy. He claimed that the loan amount should be deducted from his wealth as the loan was secured against the life insurance policy. The WTO and the AAC negatived the claim. The two orders were confirmed by the Appellate Tribunal. Thereupon, at the instance of the assessee, the above question is referred to this court for determination by this court.
The assessee seeks to substantiate the claim from the standpoint of legislative changes made in s. 5(1), where the word "chargeable" is sub-stituted after the word "payable" is deleted.
Before we go into this question, it may be stated that the definition of "net wealth" under s. 2, clause (m), sets out that a debt which is obtained on the security of an asset which is not included in the net wealth "is exempted" under sub-clause (ii) of s. 2(m). Section 5(1)(vi) of the Act reads as follows :
"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.
Provided that........"
On a reading of clause (vi) of s. 5(1) read with s. 2(m)(ii), it is obvious that a life insurance policy is not to be included in the "net wealth" of an assessee. If that is so, the loan obtained on the security of a life insurance policy for that reason is not to be deducted. It is on this basis that the claim of the assessee has been rejected by the assessing authorities.
The learned counsel for the assessee, however, repeated the arguments which had not found favour with the taxing authorities. The principal sub-mission is with regard to the change in the words where the word "chargeable" is now substituted instead of the word "payable". Secondly, it is argued, a policy is not "excluded" in the charging section and, therefore, the loan has to be deducted. These two contentions were considered in the decision of the Madras High Court in T.V. Srinivasan Vs. Commissioner of Wealth-tax, . We are in agreement with the reasoning and conclusion reached therein that in the scheme of the Act, there is no significant difference between the words "chargeable" and "payable". We adopt the reasoning and reject the contention raised in this case. We answer the question in the negative, against the assessee and in favour of the Revenue to hold that the amount of Rs. 19,486 cannot be deducted. No costs.