Law: Wealth Tax Act, 1957

Section: 27(3),7(2)(a),2

Section 7 of the Wealth-tax Act, 1957 - Valuation of assets - Immovable property - Assessment year 1959-60 - Due to losses and insufficiency of profits in past, depreciation was not provided for in full in accounts in respect of assets of company - Assessee urged that value of fixed assets should be taken to be their written down value computed for purposes of income tax and not book value - Tribunal held that written down value should be taken on basis for arriving at value of assets - Whether Tribunal was correct in its action - Held, yes - Whether while valuing business assets under section 7(2)(a), valuation made in balance-sheet is not conclusive of matter and valuation made in balance-sheet will have to be adjusted by taking into consideration circumstances of each case - Held, yes FACTS Due to losses and insufficiency of profits in the past, depreciation was not provided for in full in the books of accounts in respect of assets of company. The assessee urged that the value, for purposes of the Act, of the fixed assets should be taken to be their written-down value computed for purposes of income-tax and not the book value, the reason therefore being that, in the books, the assets had been shown at a higher value, the normal depreciation, due partly to insufficiency of profits in some years, not having been charged against in the accounts. Ultimately the Tribunal held that the asset. In respect of the valuation date as on 31-3-1959, the WTO took the gross assets as shown in the balance-sheet as on that dates. Valuation based on the balance-sheet was a certified one. The Tribunal, held that the written down value of fixed assets as on 31-3-1957, should be taken as the basis for arriving at the value as on the 31-3-1959. On reference: HELD The basis mentioned in section 7(2)(a) is an alternative basis. The WTO is not compelled to adopt that basis. It is left to his discretion to adopt that basis or not. He may, if he so chooses, proceed to value the business assets on the basis of the market value as provided under section 7(1). The basis provided under that provisions can be adopted only where the assessee is carrying on a business for which accounts are…

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