TMI Blog1987 (9) TMI 26X X X X Extracts X X X X X X X X Extracts X X X X ..... ability of the assessee, towards purchase of 1,150 shares of the Bank of Rajasthan Ltd., should be allowed as a deduction while computing the net value of the shares of the said company held by the assessee ignoring any deduction of the said loan liability which is attributable to any part of the value of the said shares that is otherwise exempt from tax under section 5(1)(xxiii) of the Wealth-tax Act, 1957 ? " The facts of the case giving rise to this reference may be summarised thus. The case relates to the assessment year 1974-75. The assessee is Hindu undivided family. It was originally having 500 shares of the Bank of Rajasthan Ltd., the value of which was fully covered by the exemption under section 5(1)(xxiii) of the Act. Subsequen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Department, it is printed at Serial No. 725 page 1426 in "Direct Taxes Circulars (1985 edition) " published by Taxmann and, according to it, the entire amount of debt was to be deducted from the aggregate amount of wealth of the assessee and the Department is bound by it. He also relied upon CIT v. M. N. Rajam [1982] 133 ITR 75 (Mad) and CIT v. Ch. Satish [1982] 133 ITR 834 (Mad). It is not disputed that the question referred to is a pure question of law. The relevant portion of section 2(m) of the Act runs as under : " (m) 'net wealth' means the amount by which the aggregate value computed in accordance with the provisions of this Act of all the assets, wherever located, belonging to the assessee on the valuation date, including ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... kind which was issued by the Board would be binding on all officers and persons employed in the execution of the Act under section 5(8) of the Act. This circular pointed out to all the officers that it was likely that some of the companies might have advanced loans to their shareholders as a result of genuine transactions of loans, and the idea was not to affect such transactions and not to bring them within the mischief of the new provision.' The directions given in that circular clearly deviated from the provisions of the Act, yet this court held that the circular was binding on the Income-tax Officer." In view of these authoritative observations, the Department was bound to follow the said circular. The Full Bench of the Gujarat H ..... X X X X Extracts X X X X X X X X Extracts X X X X
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