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TMI Blog1996 (4) TMI 152X X X X Extracts X X X X X X X X Extracts X X X X ..... nces of the case, the learned CIT(A) has erred in deleting the addition of Rs. 17,00,000 representing the value of the building on the valuation date by ignoring the fact that--- (i) the debt secured from Bank is not related to the asset belonging to the assessee. (ii) No charge has been created in respect of said property in terms of provision of Indian Registration Act, 1908." 2. Shri G.C. Sharma represented the assessee and Shri B.K. Haldhar appeared on behalf of the Department. 3. The facts in brief are that the assessee is a private limited company. It filed its returns for assessment years 1984-85 to 1988-89 declaring following net wealth and additions made were as under : A.Y Net Wealth declared Addition mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... curity '. This was not so for the other assessment years. The user of the expression ' Collateral ' in any case would make no difference as the security was there for all intent and purposes. There was an equitable mortgage of the asset in question. The expression ' collateral ' as understood in common parlance is nothing but an additional security. Charge has been created in regard to the entire building which has been registered with the Registrar of the Company,Delhiand Haryana. The transfer of interest in the property by way of equitable mortgage could require no registration under section 59 of the Transfer of Property Act. No distinction can be made between different types of securities, hence the question of priority amongst various ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 40 of the Finance Act, 1983 specifies following asset :--- " (vi) building or land appurtenant thereto, other than building or part thereof used by the assessee as factory, godown, warehouse, cinema house, hotel or office for the purposes of its business or as a hospital creche, school, canteen, library, recreational centre, shelter, rest-room or lunch room mainly used for the welfare of its employees or used as residential accommodation, except as provided in clauses (via) and (vib), and the land appurtenant to such building or part ; " 6.1 The property in question is Pratap Building which has also been offered as a security termed as ' collateral security ' in the concerned letters but only for assessment years 1984-85 and 1985-86, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tioned in No. 4 above. 6. Rs. 3 lakhs Signing letters of Guarantee in favour of Govt. and Semi-Government authorities. Securities for all the facilities. (a) Pledge of Dividend paying quoted Marketable Shares, present market value INR 3,370,000. (b) Equitable Mortgage of property at 6,Aurangzeb Road,New Delhifor INR 5,750,000. (c) Equitable Mortgage ofFactoryLand, Building Machinery at Naharwar Unit in Sahibabad (U.P.) for INR 2,500,000. (d) Registered Letter of Hypothecation for INR 800,000 over movable plant and Machinery, tools, implements belonging to the borrowers and stored or held at their factory known as Naharwar Engineering Works, Sahibabad. Collateral se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which apply to a simple mortgage shall so far as may be, apply to a mortgage by deposit of title-deeds." Thus, under the Transfer of Property Act mortgage by deposit of Title-Deed is one of the forms whereby the transfer of interest in specific immovable property is made for the purpose of securing payment of money advanced or to be advanced by way of loan. ' Security ' in turn as defined in Stroud's Judicial Dictionary, Vol. 4, 3rd Edition at page 2697 is as follows : ' " SECURITY " speaking generally is anything that makes the money more assured in its payment or more readily recoverable, as distinguished from, e.g., a mere I.O.U. which is only evidence of a debt.' 6.4 Similarly, in Penguine Business Dictionary by Michael Greener ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rity exclusive to a particular asset. Intention of the parties whether charge has been created is to be gathered from the essence of the agreement and not the form. 7. As to the contention relating to the provisions of Registration Act, we find that the aforesaid ground has never been the basis for rejecting the assessee's stand by the Wealth-tax Officer. This has also not been considered by the learned Commissioner of Wealth-tax (A), as rightly maintained by Shri G.C. Sharma. In this context we, however, find that as per the provisions of section 59 of the Transfer of Property Act, which reads as under, the registration in respect of the mortgage by title-deed, is not required : " Section 59. Mortgage when to be by assurance-- Where ..... X X X X Extracts X X X X X X X X Extracts X X X X
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