TMI Blog1994 (6) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... inst FD of Rs. 4 lakhs. The assessee had total fixed deposit of Rs. 6 lakhs. The Assessing Officer observed that the liability is partly referable to the exempt asset. He, therefore, worked out the allowable liability at Rs. 1,15,937 as per calculation given below: 2,62,500 X 2,65,000 / 6,00,000 = 1,15,937 2. On appeal, it was contended that the exempt assets were allowable only to the extent of Rs. 2,65,000 and the total exempt assets were more than the liability secured on exempt assets and Rs. 2,65,000 taken together. It was, therefore, pleaded to allow the liability in full. The first appellate authority directed the Assessing Officer to take the value of fixed deposit of Rs. 6,00,000 - Rs. 2,62,500 = Rs. 3,37,500. As a consequenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which is otherwise includible in the net wealth. The aforesaid Board's circular is a clarification about deduction of debts secured on property under s. 2(m)(ii) of the WT Acv. The learned counsel has submitted that the lower authorities have not appreciated the provisions of law and Board's circular in proper perspective. He, therefore, pleaded that as per s. 2(m)(ii) read with Board's instruction cited above, the liability of Rs. 2,62,500 secured against fixed deposits is fully allowable, there being taxable fixed deposits more than the liability. 4. We have considered the facts and rival submissions and also gone through the relevant provisions and Board's instructions. The fixed deposit amount of Rs. 3,35,000 being taxable, the liab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 7. The learned Departmental Representative relied upon the order of the Assessing Officer. The learned counsel for the assessee, on the other hand, submitted that in the light of various decisions cited, the income-tax liability was fully allowable. 8. We have considered the facts and submissions made. We find that the assessee claimed deduction in respect of the income-tax liability for the asst. yrs. 1981-82 to 1985-86 as per details below: Asst. yr. Income tax liability . Rs. 1980-81 5,790 1981-82 630 1982-83 67,063 1983-84 76,776 1985-86 81,608 . 2,31,867 We further find that the search was conducted at the busin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as rejected the claim for the reason that the tax liability was outstanding for more than two years. This implies that the claim has been rejected under s. 2(m)(iii)(b) and not under sub-cl. (a) to s. 2(m)(iii). The learned counsel has rather heavily relied on the decision of the Supreme Court in the case of Kantilal Manilal. The Hon'ble Supreme Court in the aforecited case considered the question whether the tax liability could be denied under s. 2(m)(iii)(a). Since the facts of the present case are not identical and are distinguishable from that of Kantilal Manilal, no support could be derived from the aforecited decision of the Supreme Court. We have also gone through the decision of the Supreme Court in the cases of CWT vs. K.S.N. Bh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... system. So far as interest income is concerned, interest amount is re-invested as and when earned in assets. It was, therefore, pleaded before the first appellate authority that the accrued interest was not includible in the total wealth. It was also submitted before the first appellate authority that the interest is deducted at the time of granting advance under a promissory note. As there was no evidence furnished in support of such contentions made, the first appellate authority confirmed the addition made of Rs. 21,365 on account of accrued interest. 11. The learned counsel for the assessee reiterated the submissions made before the first appellate authority whereas the learned Departmental Representative relied on the orders of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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