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Issues:
Allowability of loans taken by the assessee for construction of self-occupied residential house property exempt under s. 5(1)(iv) of the WT Act. Detailed Analysis: The appeals by the assessee for consecutive assessment years 1975-76 and 1976-77, regarding the allowability of loans taken for construction of a self-occupied residential property exempt under s. 5(1)(iv) of the WT Act, were being addressed through a common order. The dispute revolved around the deduction of loans claimed by the assessee. The WTO had allowed deductions on a proportionate basis, considering a portion of the property value as exempt. The AAC provided nominal relief, which the assessee contested. The representative argued that the entire loan amount should be allowed as a deduction, citing relevant court decisions supporting their stance. The Departmental Representative, however, supported the lower authorities' decisions, referring to other court judgments favoring their position. Upon careful consideration, the Tribunal observed that the property values and outstanding loans for both assessment years were known. The Tribunal noted that the value not includible in the net wealth of the assessee under s. 5(1)(iv) was only Rs. 1 lakh, which was less than the total loan amounts. Therefore, the Tribunal found no justification for apportioning the loans based on exempt and non-exempt values of the property. The Tribunal referred to the Supreme Court judgment in CIT vs. Vegetable Product Ltd., emphasizing that when two plausible views exist, the one favorable to the assessee should be adopted. Noting that the Madras High Court supported the assessee's position while the Gujarat High Court favored the Revenue, the Tribunal decided in favor of the assessee and allowed the appeals. In conclusion, the Tribunal allowed both appeals, ruling in favor of the assessee regarding the deduction of loans taken for the construction of the self-occupied residential property, emphasizing the principle of adopting the view favorable to the assessee when multiple plausible interpretations exist.
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