Ramachandran Nair, J.

1. The short question arising for consideration in these connected appeals is whether the funds borrowed by the respondent Company from the directors for releasing mortgage which the bank had over the assessee's property is allowable deduction in the determination of net wealth under 2(m) of the Wealth Tax Act. We have heard Senior Counsel Sri.P.K.R.Menon appearing for the revenue and M/s. Menon & Pai, represented by Adv. Mr.A.K. Jayasanker Nambiar, for respondent assessee.

2. The respondent company owned 540 cents of land with buildings wherein they were running a tile and bricks factory. However, on account of financial difficulties, the factory remained defunct for several years. Major portion of the said land belonging to the assessee was urban land and 160 cents was within the Panchayat area. In the course of time, the company had borrowed funds for the purpose of working capital from the Bank against a mortgage executed in respect of its landed property. When the mortgage debt with interest went upto Rs.86,00,373/-the Bank offered one time settlement for settling the liability for Rs.40,72,924/-. The assessee company borrowed loans from th