1983 (12) TMI 91 - AT - Wealth-tax

Summary

Issues:
- Disallowance of deduction of debts incurred in relation to acquisition of shares for assessment years 1973-74 to 1975-76.

Analysis:
The judgment involves three appeals by the assessee against the consolidated order of the AAC, Central Range-I, Bombay, regarding the disallowance of deduction of debts incurred in relation to the acquisition of shares for the assessment years 1973-74 to 1975-76. The WTO disallowed a portion of the claimed debts based on the proportion of shares exempt from tax. The AAC upheld this decision, leading to the present appeals before the tribunal.

The assessee argued that neither the WTO nor the AAC provided any evidence linking the debts to the shares. The assessee's counsel referred to a Board's Instruction stating that if debts are secured on or incurred in relation to partially exempt property, the deduction should be allowed to the extent beneficial to the assessee. Citing Supreme Court cases, the counsel contended that such instructions are binding on revenue authorities, and the assessee should be entitled to the full deduction of debts.

On the contrary, the departmental representative argued that the WTO's finding that debts were related to share acquisition was not challenged before the AAC. Therefore, the assessee cannot contest this finding now, as it requires fact investigation not previously adjudicated. The representative relied on previous orders supporting the proportional deduction of debts.

The tribunal acknowledged the non-challenge of the WTO's finding by the assessee before the AAC. However, it recognized the binding nature of beneficial Board's circulars on revenue authorities. In line with the Board's Instruction, the tribunal determined that for the assessment years 1973-74 and 1974-75, where the value of shares exceeded the debts after statutory exemptions, no disallowance could be made. For the assessment year 1975-76, the disallowance was limited to the excess of debts over the value of shares post-exemption. The tribunal calculated the disallowance accordingly.

Additionally, a ground related to the addition of the value of silver utensils for the assessment years 1973-74 and 1974-75 was not pursued during the hearing, leading to partial allowance of the appeals.

In conclusion, the tribunal partially allowed the appeals, primarily concerning the disallowance of deduction of debts incurred in relation to the acquisition of shares for the specified assessment years.