1996 (4) TMI 152

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....ssessee 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 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    &nbs....

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....poses of levy of wealth-tax. The aforesaid nexus has to be a 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 :-....

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....sp;              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             &nbsp....

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.... the Transfer of Property Act, which reads as under, all the provisions which apply to Simple Mortgage apply to mortgage by deposit 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 safe....