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TMI Blog1976 (12) TMI 94X X X X Extracts X X X X X X X X Extracts X X X X ..... ve assessments years (valuations dates being the 12th April of the respective assessments years) the assessee had claimed exemption under s. 2 (e)(v) of the Wealth-tax Act in respect of advances made in mortgages and others as set out below on the ground that the interests in the mortgages and other advances made by the assessee did not exceed a period of six years : 1969-70 Rs. 78,498 1970-71 Rs. 52,272 1971-72 Rs. 79,489 1972-73 Rs. 1,14,389 1973-74 Rs. 1,07,333 1974-75 Rs. 80,214 The Wealth-tax officer rejected the assessee's claim on the ground that the above advances were in any way different from any loan and therefore, such investments could be considered as movable assets. The WTO also added the accrued interest in resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the cross-objections against the additions towards the accrued interest sustained by the Appellate Assistant Commissioner. 4. On behalf the Revenue the learned departmental representatives Shri Gopinath ably argued that the Appellate Assistant Commissioner has erred in his interpretation of s. 2(e)(v) of the Wealth-tax Act. He submitted that the Wealth-tax Officer has only added the amounts advanced by the assessee as loan on the security of property and other advances and not the value of the properties that were actually mortgaged. He referred to s. 2 (e) (v) of the Wealth-tax Act and the contented that the interest referred to in the above provisions would not apply to mortgages, which are only loans advanced on security of property. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... commentary of Shri Sampath Iyengar even the investment of the principal sum by the mortgagee in the case of simple mortgage would qualify for the exemption under s. 2(e)(v) of the Wealth-tax Act. Arguing the cross objections filed by the assessee he submitted that the Appellate Assistant Commissioner having held that the principal was not includible in the wealth of the assessee had gone wrong in holding that interest accrued on the mortgage loan was includible in the total wealth of the assessee. 6. We have carefully considered the rival submissions. The dispute in these appeal centres round the question whether the amounts advanced by the assessee on mortgage and others as found by the appellate Assistant Commissioner and which is refer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n engagement which may give rise to a pecuniary liability" The assessee as money-lender had advanced money to various persons who had mortgaged their properties for securing the payment of such loans. A mortgage does not cease to be a loan simply because it is secured by a property. It is essentially a loan for the repayment of which property is effered as security. There can be no dispute that in determining the assets of an assessee the loans advanced by him would certainly be included. Merely because the repayments of the loans are secured by properties they do not cease to be loans and they do not fall under the provisions of s. 2(e)(v) of the Wealth-tax Act. s. 2(e)(v) would apply to case where a property say a house or land is transf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the provisions of the Wealth- tax Act, 1957. We are, therefore, unable to place reliance upon the above extract of the commentary of Shri Sampath Iyengar relied upon by the assessee's representative. To our minds it appears to be quite clear that the provisions of s. 2(e)(v) do not apply to mortgages which are only loans advanced by the assessee on the security of property. The above provisions would apply only to such cases where there is no possibility of the interest in the properties being available to the assessee after the expiry of a period of six years in any contingency. In the case of mortgages, as in the instant case, where the period of redemption is six years or less and the mortgages are not redeemed in that period, the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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