2014 (10) TMI 435

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....s debt owed there-against. 3. The controversy centers around the quantum of the debt owed u/s. 2(m) of the Act in relation to the assessee's lone asset subject to tax, which is therefore deductible in computing its net wealth under the Act. While the assessee claims it at Rs. 212 lacs (refer ground nos. 1 to 7), the Revenue's stand, as it finally obtains, is of it being at nil. Though the Revenue initially admitted to the debt owed at Rs. 58 lacs, the loan/s liability assumed for the purchase of the asset was found to have been discharged during the year itself, so that no amount could be said to be owed by the assessee in relation thereto as on 31.03.2009, the valuation date and, accordingly, rectification proceedings were initiated, reducing the said amount to nil, which though stood not accepted by the ld. CWT(A) vide his order dated 06.02.2014. It is for this reason, the subject matter of the appeal being the same, that we consider the appeals under reference as cross appeals. The brief facts of the case are that the assessee, a 2/5th owner of a flat at NCPA, Mumbai, purchased the balance 3/5th share from the other three co-owners, holding 1/5 share each, for a considerat....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....e security deposit held by the said co-owner as a previous co-owner, i.e., corresponding to his 1/5th share, to which the assessee become entitled to upon transfer. The same clearly has no impact on the loan transaction; the assessee only receiving from the seller the corresponding share of the security deposit held by the latter on the transfer of his share to it. We, accordingly, have no hesitation in confirming Rs. 27 lacs, the amount outstanding in the loan account of Shri Manoharlal Tandon as on 31.03.2009, as a debt owed u/s. 2(m). Shri Jaydeep Tandon (Rs.185 lacs) 4.3 The entries in respect of the credit and payment of Rs. 62 lacs, and on the same dates, also appear in the assessee's account in the books of Shri Jaydeep Tandon (PB-1, pg. 128), being also a seller, and to the same effect, i.e., nil, being in fact not a part of the loan account. The first entry in the loan account is a sum of Rs. 92 lacs received on 12.06.2008. The same is utilized, again, for payment of purchase price of Rs. 93 lacs to one of the co-owners on 18.06.2008 (PB-1, pg. 16), so that it is eligible for being a debt owed. The loan is repaid to the extent of Rs. 30 lacs on 08.09.2008, so that Rs....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....tion 2(m)(ii), i.e., a debt secured on or incurred in relation to a property not chargeable to wealth tax. That is, a mere investment of funds would not alter the character of the receipt, on which (character) there was no disagreement between the parties. This is the short point on which the hon'ble court was called upon to and did in fact opine, resolving the questions of law posed before it. It is even otherwise trite law that a decision is an authority on what it actually decides, and not what may remotely or even logically flow from it (refer: Goodyear India Ltd. v. State of Haryana [1991] 188 ITR 402 (SC)). We examine the assessee's claim on merits, which is thus open for us to adjudicate. In our view, a security deposit taken by the assessee-lessor leads to an inflow of funds with it. He is thus without doubt better placed than a person not a receipt of the security deposit, result as it does in a corresponding increase in his cash/bank balance, which could be profitably deployed/invested. Of course, there is a concomitant liability to repay the debt on the termination of the agreement, i.e., the assessee's assets and liabilities both undergo an increase by the same amoun....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....chnology Ltd., however, stands admittedly terminated prior to the valuation date, and it is in fact only upon so that the deposit amount stands refunded thereto. There is no subsisting lease agreement in favour of the said lessee-depositor as on the valuation date. The repayment of the security deposit during the year, so that there is no liability in its respect as at the year-end, there is no question of the same being a debt owed u/s.2(m) in relation to the assessee's flat (asset). That a reduction in the assessee's investible resources (to that extent) should result in the denial of a claim, is the paradox that we had sought to emphasize herein-before with reference to the assessee's claim for a reduction in his wealth, i.e., on principle. The decision by the hon'ble court afore-referred is therefore neither applicable in law or on facts. No part of the balance loan of Rs. 123 lacs from Shri Jaydeep Tandon would therefore qualify as a debt owed as on the valuation date. The claim u/s. 2(m) qua loan therefrom is therefore valid for Rs. 62 lacs only. We decide accordingly. 4.4 The ld. Authorized Representative (AR) would orally submit that Rs. 13.50 lacs, i.e., the security de....