Law: Wealth Tax Act, 1957

Section: 7

I. Section 7 of the Wealth-tax Act, 1957 - Valuation of assets - General - Assessment year 1957-58 - Whether value of fixed assets as shown in balance sheet after deducting depreciation is normally to be accepted as correct unless assessee convinces taxing authority that figure shown as depreciation should not be accepted for good reason, or else taxing authority is satisfied for sufficient reasons that figures given by assessee are incorrect - Held, yes II. Section 2(m) of the Wealth-tax Act, 1957 - Net wealth - Debt owed - Assessment year 1952-53 - Assessee paid certain sum as bonus to its employees in accordance with award of Tribunal - Subsequently, on appeal, Supreme Court reduced amount of bonus by one half - Department claimed this sum as an asset - Case of assessee was that that sum could never be recovered from employees bearing in mind normal relationship between employer and employees and consequently, it should be treated as a bad debt and not an asset - Tribunal accepted case of assessee - Whether finding of Tribunal, that in view of normal relationship between assessee and its employes, chances of recovery of advance payment of bonus from workmen were negligible and so said sum could not be included in assessee's net wealth, was essentially a finding of fact and, therefore, could not be challenged in instant reference - Held, yes FACTS - I The assessee had, in its balance-sheet, showed certain amount as depreciation value while estimating the net assets. But before the wealth-tax authorities it claimed that the total depreciation should be calculated on the basis of the depreciation allowed under the Indian Income-tax Act. Both the WTO and the AAC, however, disallowed this claim, holding that the sum shown by the assessee in its balance-sheet should be taken as binding on it. On appeal the Tribunal took a contrary view. FACTS - II The employees of the assessee claimed certain sum as bonus which was twice the sum of Rs. 7,89,611. On the basis of an award given by the Industrial Tribunal which was confirmed by the Appellate Tribunal. But both the employees and the assessee had filed an appeal and cross-appeal before the Supreme Court against the…

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