Law:

Section:

Section 7 of the Wealth-tax Act, 1957 - Valuation of assets - General - Assessment years 1962-63 to 1966-67 - Whether section 7 refers to gross price which purchaser would have paid if asset is sold in open market and not even hypothetical expenditures in relation to that sale are deductible - Held, yes - Whether therefore, no capital gains tax is deductible in determining value of assets under section 7 - Held, yes Words and phrases : Words 'if sold in open market' as occurring in section 7 of Wealth-tax Act, 1957. FACTS The liabilities exceeded the value of the assets as on the relevant valuation dates. The WTO proposed to revalue the assets as per section 7. The assessee contended that, if the assets had to be revalued at the price which it would fetch if sold in the open market on the valuation date as provided in section7, the capital gains tax payable on such valuation should be reduced from the total value in ascertaining the net wealth. This contention was rejected by the WTO and he ascertained the aggregate value of the assets with reference to the price which they would fetch it sold in the open market on the valuation date as provided under section 7. The AAC and the Tribunal confirmed the view of the WTO. On reference : HELD Section 7 only deals with the method of valuation of assets. It only enables the WTO to estimate the value at the price which it would fetch if sold in the open market on the valuation date. If at all, it creates a hypothetical sale for the purposes of determining the value of the assets. It might be seen that under section 3, wealth-tax is imposed on the net wealth and under the definition of 'net wealth' it is an amount. So the tax is levied on the amount which is determined as net wealth and necessarily, therefore, each one of the movable and immovable properties had to be valued and section 7 is one of the provisions which is intended for the determination of the value. On a reading of the provision, therefore, there is absolutely no warrant for the contention that a fictional liability to pay capital gains tax had been created or has arisen necessitating the deduction of the same in determining the value of the assets under…

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