Law:

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Section 7 read with section 2(q) of the Wealth-tax Act, 1957 - Valuation of assets - Others - Assessment year 1978-79 - Assessee was a film-distributor - For assessment year in question assessing authority determined value of films in stock - Tribunal held that fair market value of films lying in stock would be represented by actual collections at re-run of such films and, therefore, directed WTO to adopt value determined by actual collection made from exploitation of films on next valuation date - Whether test of actual collection on next valuation date might not be correct relevant factor for deciding as to what its value was on valuation date which undoubtedly was only relevant date for evaluating assets and, therefore, Tribunal erred in directing to evaluate films with reference to next valuation date - Held, yes [Matter remanded to Tribunal] FACTS The assessee was a film distributor. In his assessment for the relevant year the valuation of film was fixed on the basis of its original cost and the assessing authority determined the value of the film in stock at certain amount. On appeal, the appellate authority held that the valuation was excessive as the assessee had purchased the films long back and they were already exploited and as such there was bound to be suitable decline in their commercial value and accordingly directed to value the films at the cost price and reduce that value by50 per cent due to depreciation of the value of the films because of their exploitation. On further appeal, the Tribunal observed that the valuation could not be taken as nil merely because the films had been exploited because it was likely that on their re-run, the films could make a better business and, the mere fact that the films had run for 90 days could not by itself be sufficient to come to the conclusion that the films had become worthless and on their re-run, they may not fetch any business. The Tribunal, held that a fair market value of the films lying in stock would be represented by the actual collections at the re-run of such films and, therefore, the Tribunal directed that the actual collections made from these films on the next valuation date would be the…

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