Law:

Section:

Section 7 of the Wealth-tax Act, 1957 - Valuation of assets - Assessment year 1957-58 - Assessee had in 1948-49 revalued its assets enhancing existing book value by Rs. 145 lakhs which was credited to capital reserve account - WTO took valuation of assets as shown in balance sheet, and rejected assessee's claim for deducting of sum of Rs. 145 lakhs while computing net value - Tribunal excluded said sum from net valuation of assets as shown in assessee's balance sheet as on relevant valuation date - On reference, High Court was of view that assessee's motive in revaluing assets at a higher figure was to declare bonus shares which however, could not be declared in absence of Government's permission, and there being a motive for revaluation of assets, valuation in balance sheet could not furnish correct basis - While affirming said exclusion High Court, therefore, held that balance sheet having not found unequivocal approval both of assessee and revenue authorities, net value would have to be ascertained under section 7(1) - Whether main idea underlying issue of bonus shares being to bring nominal amount of issued share capital in line with true excess of assets over liabilities, it involved a genuine and correct valuation of assets and not either under-valuation or inflation, and in absence of convincing and acceptable reasons for alleged inflation by assessee; WTO was justified in accepting figure given by assessee itself in its balance sheet as correct figure and valuing assets accordingly - Held, yes FACTS The assessee-company had, in the year 1948-49, revalued its assets enhancing the existing book value by Rs. 145 lakhs which was credited to the capital revenue account. For the assessment year 1957-58, while assessing the wealth-tax, the WTO took the valuation of the assets as shown in the balance sheet as on 31-3-1957 and rejected the assessee's plea that Rs. 145 lakh by which the book value of the fixed assets was enhanced should be deducted in the computation of the net value. On second appeal, the Tribunal excluded the said sum from the net valuation of the assets as shown in the balance sheet. On reference, the High Court was of the view that the…

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