9911796707
TMI Blog1971 (8) TMI 5X X X X Extracts X X X X X X X X Extracts X X X X ..... of Wealth-tax, West Bengal. It is necessary to deal with the appeal of the Commissioner of Wealth-tax as the other appeal shall also stand disposed of once the question is answered in the Commissioner's appeal. The assessee is a public limited company. In the assessment year 1948-49 the assessee revalued its assets enhancing the existing book value by Rs. 1,45,00,000 credited to the capital reserve account. In assessing the wealth-tax payable by the assessee for the assessment year 1957-58 the relevant valuation date being March 31, 1957, the Wealth-tax Officer proceded under section 7(2) of the Wealth-tax Act, hereinafter called the "Act", and took the valuation of the assets at Rs. 5,10,40,897 as shown in the balance-sheet the relevant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shown in the balance-sheet of the assessee as on March 31, 1957?" The High Court was of the view that the revenue had taken the stand before the Tribunal that the motive of the assessee in revaluing the assets at a higher figure was to declare the bonus share which, however, could not be so declared as the permission of the Central Government was withheld in that behalf. According to the High Court there was a motive for revaluation of the assets and therefore the valuation in the balance-sheet could not furnish the correct basis. It was pointed out that the conduct of the assessee was "far from what was to be desired" because even in the successive balance-sheets the revaluation figure appeared even after the assessee had failed to get t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve a true and fair figure of the state of its affairs as at the end of the financial year. If the assessee has shown the net value of the assets at a certain figure in the balance-sheet the Wealth-tax Officer would be entitled to accept it on the footing that the assessee knew best what the valuation of the assets was. It was, however, open to the assessee to satisfy the authorities that the said figure had been enhanced or increased or inflated "for acceptable reasons". It was equally open to the Wealth-tax Officer not to accept the figure given by the assessee but to arrive at another figure if he was satisfied for good reasons that the valuation given in the balance-sheet was wrong. There can be no doubt that section 7(2)(a) of the Act c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pitalised or converted into share capital. The capitalisation of free, i.e., voluntary reserves, merely means that undistributed profits have been permanently ploughed back and converted into share capital which cannot be returned to the members by way of dividend. (vide Modern Company Law by L.C.B. Gower, page 110.) It is quite clear that the main idea underlying the issue of bonus shares is to bring the nominal amount of the issued share capital of the company into line with the true excess of assets over liabilities. This will involve a genuine and correct valuation of assets and not their under-valuation or inflation. It must be remembered that the power to issue shares for increasing the capital is of a fiduciary nature and must be e ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
