Law:

Section:

Section 7 of the Wealth-tax Act, 1957 - Valuation of asset - General - Assessment year 1957-58 - Whether wealth-tax authorities have power to adopt balance sheet value of assets as net value of business as a whole but this valuation is not sacrosanct and they are at liberty to make adjustment therein if balance sheet value does not represent real or correct value of assets - Held, yes - Valuation report of an expert valuer showed that at valuation date, valuation of depreciable assets in income-tax return was not in any way unreasonable - Whether Tribunal was right in directing that depreciable assets should be valued in net wealth after allowing for their normal depreciation as computed for income-tax purposes - Held, yes FACTS The assessee company owned certain depreciable assets, namely, buildings, plants and machinery, etc. They valued these fixed assets in their return under the Act after writing off depreciation in its account books and seeking a further deduction from the computation of its net wealth as shown in the balance sheet on the ground that it was entitled to further adjustment as provided for in section 7(2)(a). The contention of the assessee was that, in the balance-sheet, no depreciation had been taken into account for many years because of 'inadequacy of profits' and its 'weak financial condition' while showing the value of the assets like land, buildings, plants, machinery, etc., and that the auditors in their report to the members stated that the balance sheet of the company's affairs at the end of its financial year gave a true and fair value subject to adequacy of depreciation on fixed assets and, therefore, the balance-sheet was a qualified one and must be read as such. According to them, the value of the assets should taken to be the written down value according to the provisions of the Income-tax Act. The WTO repelled the assessee's contention and proceeded to assess the net wealth of the company according to the global method of valuation as per balance-sheet under section 7(1)(a). On appeal, AAC rejected the claim of the assessee on the ground that there was no provision in the Act for valuing the assets in accordance with the…

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