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Issues Involved:
1. Valuation of the right to equity of redemption in the mortgaged property for assessment years 1976-77 to 1981-82. 2. Inclusion of Rs. 10,80,000 as an asset in the net wealth of the assessee for assessment years 1982-83 to 1986-87. Detailed Analysis: 1. Valuation of the Right to Equity of Redemption: The primary issue was whether the Tribunal was correct in holding that the only right the assessee had over the mortgaged property was the right to equity of redemption and whether this right had any value. The Tribunal concluded that since the sale proceeds of the mortgaged property were entirely appropriated by the Kerala Financial Corporation towards the loan amount, the value of the right to equity of redemption was nil. Consequently, nothing was includible in the net wealth of the assessee for the assessment years 1976-77 to 1981-82. The Revenue contended that the document dated September 22, 1969, was not a mortgage but merely created a charge on the property. However, the court rejected this argument, affirming that the document was indeed a mortgage deed. The court emphasized that the terms of the document indicated a transfer of interest in specific immovable property to secure payment of the loan. The court also noted that the same document had previously been considered a mortgage in another case involving the same assessee. In conclusion, the court upheld the Tribunal's decision that the assessee's right was limited to equity of redemption, which had no value since the sale proceeds fell short of the loan amount. Thus, the value included in respect of the mortgaged property was correctly deleted from the net wealth for the assessment years 1976-77 to 1981-82. 2. Inclusion of Rs. 10,80,000 as an Asset: For the assessment years 1982-83 to 1986-87, the issue was whether the sum of Rs. 10,80,000 credited to the assessee by the company should be included in the net wealth. The Tribunal found that the book debt created by the company in favor of the assessee did not represent any value until it was realized, given the company's financial condition and liabilities exceeding its assets. Consequently, the Tribunal deleted the inclusion of Rs. 10,80,000 from the net wealth. The Revenue argued that the hypothetical market value of the property should be considered, citing Supreme Court decisions. However, the court noted that the Tribunal had thoroughly examined the company's financial status and concluded that no outsider would be willing to pay the book value for the debt. The court agreed with the Tribunal's factual finding that the book debt's market value was nil. The court clarified that while actual realization is not necessary for inclusion in net wealth, the asset must have a market value. In this case, the Tribunal rightly determined that the book debt had no market value and thus correctly excluded the Rs. 10,80,000 from the net wealth for the relevant assessment years. Conclusion: The court affirmed the Tribunal's decisions on both issues. The value included in respect of the mortgaged property for assessment years 1976-77 to 1981-82 was correctly deleted, and the inclusion of Rs. 10,80,000 for assessment years 1982-83 to 1986-87 was also rightly deleted. The court answered all questions in favor of the assessee and against the Revenue, directing the Income-tax Appellate Tribunal, Cochin Bench, to pass consequential orders accordingly.
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