9911796707
TMI Blog1996 (4) TMI 152X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 made 1984-85 2,00,000 17,00,000 1985-86 85,000 17,00,000 1986-87 77,500 17,00,000 1987-88 24,09,761 1,72,54,739 1988-89 46,34,400 1,76, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... close one. Since in the case of the assessee, this was not so and the security offered was one amongst many and that too to cover the overall facilities, the same could not be considered for the purposes of being a direct charge against the asset, viz., ' Pratap Building '. Drawing our attention to the provisions of section 40 of the Finance Act, 1983, it was argued that since a part of the asset was taxable it is only the proportionate debt, if at all, which has to be considered against the value of the property. He also emphasised that lack of registration of the document is another reason for not accepting the assessee's stand. 6. We have considered the rival submissions. As per scheme of section 40 of the Finance Act, 1983, the net wealth of the assessee is to be computed after taking into account the aggregate value of all assets as specified in sub-section (3) of section 40 of the Finance Act, 1983, after deducting therefrom the debts owed, which are secured on or which have been incurred in relation to such assets. Clause (vi) of sub-section (3) of section 40 of the Finance Act, 1983 specifies following asset :--- " (vi) building or land appurtenant thereto, other than bui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bsp; scooters etc. 2. Rs. 7,30,000 Pledge of goods under bank's lock and key. 3. Rs. 25,00,000 Purchase of bills drawn on company. 4. Rs. 40,00,000 Bills drawn thereunder for tractors, Scooters, M. Cycles etc. etc. 5. Rs. 35,00,000 For bills drawn for goods other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sit of title-deeds :---- " 96. Mortgage by deposit of title-deeds -- The provisions hereinbefore contained 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 at page 387, New Edition the expressions ' Security ' and ' collateral security ' read as under : ' " SECURITIES " At one time a security was essentially something given or guaranteed by a borrower to safeguard a loan. In banking and money lending this remains the case, a security being given in the form of property or rights over that propert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eed : on the other hand as held by their Lordships of Hon'ble Justice K. Subba Rao and Hon'ble Justice S.R. Mudholkar in K. J. Nathanv. S. V. Maruthi Rao AIR 1965 SC 430 (at page 635 of the Commentary of S.N. Gupta on Banking Law, Theory & Practice, 2nd Edition) there are three requisite conditions for such a mortgage. These are (i) Debt ; (ii) Deposit by title-deed ; and (iii) an intention that the deed shall be security for the debt. The essence of this form of mortgage is that the deposit by title-deed operate as contract between the parties to create a mortgage. Whenever a person delivers to a creditor or his agent documents of the transaction mortgage by deposit of title-deed is created. Intention to create a charge is to be gathered from the document. No material was placed before us to show that no such intention to create a charge was there on the pan of the assessee. Thus on the facts a valid debt has been created on the properly, viz.,PratapBuildingand as such the deduction claimed is allowable. Admittedly, there is a close nexus between the debt and the asset, the value of which is chargeable under the Wealth-tax Act for the purpose of section 40 of Finance Act, 1983. As ..... X X X X Extracts X X X X X X X X Extracts X X X X
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