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TMI Blog1983 (4) TMI 79X X X X Extracts X X X X X X X X Extracts X X X X ..... as on Value of assets held for 13-4-1975 more than 6 months continuously prior to the valuation date. Exempted u/s 5(1A) Rs. Rs. 1. Shares in Indian Companies. 36,530 36,530 2. Moneys in current account with Grindlays Bank Ltd., 29, Netaji Subhas Road, Calcutta --- 1 7,854 4,305 3. Moneys in current account with United Industrial Bank Ltd., Hatkhola Branch, Calcutta---5 1,702 1,702 4. Moneys in current account with Central Bank of India, Hatkhola Branch, Calcutta---5 20,584 13,669 5. Moneys in compulsory deposit account with Central Bank of India, Hatkhola, Calcutta---5 1,440 --- 6. Moneys in fixed deposit with United Industrial Bank Ltd., Hatkhola, Calcutta----5 2,11,842 93,794 7. Moneys in fixed deposit with Central Bank of Ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the assessee's case has not been accepted by the Tribunal for the earlier years, but the earlier Bench had not the benefit of the decision of the Madras High Court. He particularly pointed out that T. V. Srinivasan v. CWT [1980] 123 ITR 464 which was relied on by the earlier Bench of the Tribunal has been distinguished by the same High Court in M.N. Rajam's case. The learned departmental representative, however, argued that M.N. Rajam's case will have no application since it relates to house property, whereas, we are concerned with fixed deposits of different denominations totalling Rs. 2,11,841 out of which Rs. 93.794 had been claimed to be exempt under section 5(1A). Shri Poddar immediately mentioned that the Madras High Court has als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the fixed deposits to the extent of Rs. 2,11,841 have been made. Therefore, it is clear that the fixed deposits are in relation to the debts. The entire fixed deposit amount has come out of the debts incurred by the assessee. If there is no outer limit fixed under section 5(1A), on the language of section 2(m)(ii), the debt to the extent of the fixed deposits which has come out of the former will not be entitled to exemption. The Legislature has laid down that whenever any debt is claimed as deduction, it must not have any relation to an exempted asset. Therefore, if the assessee claims the deduction of the debt and if it is found that the debt is in relation to an exempted asset, the exemption is not allowable. By providing a limit o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent that it exceeds the value of the exempted asset their Lordships would not have allowed the allowance of the debt. To put it in concrete terms, suppose the debt incurred was Rs. 70,000, exempted portion being Rs. 61,500 and the non-exempted portion is also Rs. 61,500, to the extent of Rs. 61,500 certainly the assessee would be entitled to deduction, but in respect of balance, viz., Rs. 70,000---Rs. 61,500=Rs. 8,500, the assessee would not be entitled to the exemption, because to that extent it is impinging on the exempted asset. As already mentioned, the situation in our case is quite different. In fact, their Lordships of the Madras High Court took note of a similar situation in T.V. Srinivasan's case and observed in M.N. Rajam's case a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on, this contention also has no merit and the matter has been fully thrashed out in the case of the Fifth WTO v. Mrs. Sona S. Sapatwalla [1983] 3 SOT 105 (Bom.) (SB). Unfortunately, the attention of the Bench was not drawn to the Special Bench decision referred to above and, therefore, the decision of that Bench cannot be accepted. 7. The next common ground relates to the claim for deduction of the loan payable by the assessee to Raja Janoki Nath Roy Ramendra Nath Roy & Co. (P.) Ltd., for these two years under appeal amounting to Rs. 1,66,142. The WTO mentioned that the aforesaid company has gone into liquidation and the assessee was the managing director of that company. He was taking loans from the above company without making any repaym ..... X X X X Extracts X X X X X X X X Extracts X X X X
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