Law:

Section:

Section 7 of the Wealth-tax Act, 1957 - Valuation of assets - General- Assessment year 1957-58 - Assessee-company revalued its assets in year 1948 and enhanced their value - For assessment year in question, Wealth-tax Officer determined assessee's total wealth by adopting enhanced value of assets as incorporated in its accounts - Whether value of assets which should be considered for purpose of computing net wealth of assessee was value as fixed in year 1948, reduced by depreciation in years following - Held, yes - Whether said computation should also take into account reduction in enhanced value occasioned by demolition of old dye house in year 1953 - Held, yes FACTS The assessee-company, after revaluation in 1948, enhanced the value of the assets, in accordance with a resolution of it directors. In 1953, an old dye house of the assessee was demolished, thereby reducing the block account slightly. For the assessment year 1957-58, the Wealth-tax Officer determined the assessee's total wealth by adopting the enhanced value of the assets as incorporated in the accounts. On second appeal, the Tribunal while holding that the full enhanced value of the assets should be adopted, allowed depreciation on the full enhanced value for the years following the year of revaluation. The Tribunal held that the allowance on account of depreciation was an adjustment which the Wealth-tax Officer should make in the balance sheet values, relying on the power to make adjustments under section 7(2). On reference : HELD In the instant case, the balance-sheet showed the value of the assets on the enhanced figure and no attempt had been made to show that it was an inflated figure. Upon the principle which found favour with the Supreme Court, in Kesoram Industries & Cotton Mills Ltd. v. CIT[1966] 59 ITR 767 (SC), the Wealth-tax Officer, when ascertaining the net wealth for the assessment year 1957-58, was entitled to take into consideration the enhanced value of the assets on the basis of the revaluation made. If the Wealth-tax Officer was entitled to take into consideration the enhanced value of the assets for the purpose of computing the wealth-tax, there was no good reason why an…

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