1. ' B.P. JEEVAN REDDY, C.J.---The question referred under section 27(1) of the Wealth Tax Act, 1957, is: "Whether, on the facts and in the circumstances of the case, the debt relating to the taxable wealth after allowing exemption under section 5(1)(iv) of the Act was allowable to the assessee?"
2. One of the assets included in the ,wealth of the assessee was a house property. It was valued at Rs,5,00,000. It was pointed out that a sum of Rs,62,500 was incurred on repairs and improvements to the said house. At the relevant time, house property by to the value of rupees one lakh only was exempt by virtue of clause (iv) of subsection (1) of section 5 read with subsection (1-A) thereof. In other words, only an amount of rupees one lakh was to be deducted out of the net wealth under section 5(1)(iv) of the Act.
3. ' The Income-tax Officer did not grant any deduction on account of the said debt of Rs,62,500 against which the assessee went up in appeal to the Appellate Assistant Commissioner. His appeal was dismissed, whereupon the assessee carried the matter to the Tribunal. The Tribunal held that it would be just and lawful to allow deduction to the extent of the taxable value of the house. In other words, the Tribunal held that 4/5ths of Rs,62,500 should be deducted in the light of the definition of net wealth contained in clause (m) of section 2. On a perusal of the relevant provision of the Act, we are of the opinion that what the Tribunal has done is perfectly in accordance with the provisions of the Act, besides being just.
4. ' The question referred is, accordingly, answered in the affirmative, i,e,, in favour of the assessee and against the Revenue. No costs.