Law: Wealth Tax Act, (XV of 1963)

Section: 2(m)(ii)

Wealth Tax Act (XV of 1963)---S.2(m)(ii)---Debt owed--Loan secured against asset which it not subject to the, levy of wealth tax is not a debt mod irrespective of its subsequent utilization which is immaterial--Wealth Tax Officer thus we justified in refusing to Am the loan WCUF 04 from the am against the security of S.N.F. Bonds which was not subject to the levy of wealth tax as debt owed. WTAs. Nos. 81 to 85/KB of 1979-80; WTAs. Nos.101 sad 102/KB of 1982-63; WTAs. Nos. 251,252/KB of 1953-84, WTAs. Nos.753 and 254/KB of 1983-84; WTA No.25B/KB of 1982-83 WTA No.182/KB of 1982-83; WTA No.182/KS of 1984-83; WTA No. 445/KB of 1987/88; (1987) 66 ITR 338; (1987)123 ITR 66 (1990)123 ITR 91 and 193 ITR 488 ref. ORDER This appeal at the instance of Department is directed against the order, dated 6-5-1987 by the learned Commissioner of Income Tax (Appeals), Zone-V, Karachi in W.T.A. No.754 relating to the assessment year 1986-87. 2. The sole objection raised on behalf of the Department is that the learned Commissioner of Income Tax (Appeals) was not justified in issuing direction to allow the claim of liability. 3. Heard Mr. Yousuf Butt, learned Representative for the Department and Mr. Khalil Ahmad, A.CA. Learned Representative for the respondent. The admitted facts are that the respondent claimed a sum of Rs.29,82,040 as liability which was secured from the U.B.L. against S.N.F. Bonds of a face value of Rs.35,00,000. The Assessing Officer held that it was not debt owed by virtue of the provisions contained in section 2(m)(ii) of the Wealth Tax Act, 1963 being secured against an asset, which is not liable to wealth tax. It was contended before the assessing officer that the liability was admissible as it was incurred in relation to an asset, which was liable to wealth tax. In this case the amount of Rs.29,82,040 was advanced to M/s. Sanaullah Woollen Mills. The liability was disallowed by the assessing officer for the following reasons: "This claim is based on the notion that the liability gets its cover from the clause, or if it has been incurred in relation to an asset which is not liable to wealth tax of section 2(m)(u) of the Wealth Tax Act, 1963. This clause…

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