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Interpretation of section 2(m)(ii) of the Wealth-tax Act, 1957 regarding deduction of debt in wealth-tax assessment. Detailed Analysis: The judgment pertains to a reference made by the Income-tax Appellate Tribunal regarding the deduction of a debt amounting to Rs. 43,022 under section 2(m)(ii) of the Wealth-tax Act, 1957 in an individual's wealth-tax assessment for the year 1969-70. The primary issue revolves around whether the debt is allowable as a deduction in computing the "net wealth" of the assessee. The Tribunal accepted the claim for deduction, but the Revenue contended that the liability was incurred in relation to a property exempt from wealth tax, thus not eligible for deduction. The court analyzed the provisions of the Wealth-tax Act, particularly section 2(m) which defines "net wealth" and outlines the deductions allowed. It highlighted that debts secured on exempted properties are not deductible, as per section 2(m)(ii). However, the court noted that the Revenue's argument was not raised before the Tribunal and found no legal flaw in the Tribunal's order. The court emphasized that for a debt to be non-deductible under section 2(m)(ii), it must be related to an asset exempted from wealth tax, which was not the case here. Further, the court examined the nature of the debt and the property involved. It clarified that the debt was not secured or incurred in relation to an exempted asset belonging to the assessee. The court reasoned that since the debt was not linked to an asset specifically exempted, the deduction should be allowed. It emphasized that section 2(m)(ii) aims to prevent double benefits and does not apply when the debt is unrelated to an exempted asset. In conclusion, the court held that section 2(m)(ii) did not apply to the case, and the debt of Rs. 43,022 was deductible in computing the net wealth of the assessee. The court ruled in favor of the assessee, allowing the deduction and awarding costs.
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