TMI Blog1976 (3) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Calcutta High Court under section 29(1) of the Wealth-tax Act (briefly the Act). The assessment years of the respondent-company (hereinafter to be described as the assessee) involved in the composite reference to the High Court under section 27(1) of the Act are 1957-58, 1958-59 and 1959-60, for which the corresponding valuation dates are 31st March, 1957, 31st March, 1958, and 31st March, 1959. The only common question of law which was referred to the High Court appertaining to all the three assessment years is in the following terms : " Whether, on the facts and in the circumstances of the case, and in view of the provisions of section 7(2) of the Wealth-tax Act, an adjustment could be made in ascertaining the net value of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r in the balance-sheets in regard to the depreciable fixed assets on account of paucity of profits and hence the, depreciation as provided for in the books was very much lower than the depreciation allowable under the provisions of the Indian Income-tax Act. The Wealth-tax Officer rejected the contention of the, assessee and estimated the net value of the assets as shown in the balance-sheets for the respective years. The Appellate Assistant Commissioner confirmed the orders of the Wealth-tax Officer in the appeals filed by the assessee. The Appellate Tribunal, however, took a contrary view and held that : "...in all such cases where proper depreciation has not been allowed for in the balance-sheet for any reason whatsoever, it is p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arrying on a business for which accounts are maintained by him regularly, the Wealth-tax Officer may, instead of determining separately the value of each asset held by the assessee in such business, determine the net value of the assets of the business as a whole having regard to the balance-sheet of such business as on the valuation date and making such adjustments therein as the circumstances of the case may require............." " It is, therefore, clear that when the assessee is carrying on a business for which accounts are maintained by him regularly it is open to the Wealth-tax Officer to determine the net value of the assets of the business as a whole with reference to the balance-sheet of such business as on the valuation date an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the wealth-tax. It is a question of fact in each case as to whether the depreciation has to be taken into account in ascertaining the true value of the assets. The onus of proof is on the assessee who must produce reliable material to show that the written down value of the assets and not the balance-sheet value is the true value. If therefore the assessee merely claims that the written down value of the assets should be adopted but fails to produce any material to show that the written down value is the true value, the Wealth-tax Officer is justified in rejecting the claim and adopting the values shown by the assessee himself in his balance-sheet is the true value of his assets." We should have thought that the question raised in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h-tax Officer may make such adjustments in the value of the assets shown in the balance-sheet in accordance with the requirements of the circumstances disclosed by the assessee. Those circumstances which will be disclosed by the assessee must relate to the determination of the real value of the assets irrespective of what is shown in the balance-sheet if the assessee seeks a lower figure than appearing in the same. Thus, onus is not discharged by merely stating that since profits in a given year are less or nil little or no provision was made for depreciation of the assets in the balance-sheet. The assessee must also show further to what extent the depreciation has resulted in lowering the value of the assets compared to that mentioned in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... profits or gains chargeable for that year or owing to the profits and gains chargeable being less than the allowance. If an assessee chooses to carry forward the depreciation allowance and shows the value of the assets at a particular figure in the balance-sheet, he cannot by merely asserting that there was no profit or very little profit compel the tax authorities to discard the value mentioned in the balance-sheet and to accept the written down value. The depreciation must have nexus with the real value of the assets itself and the burden is upon the assessee to satisfy the Wealth-tax Officer by producing relevant reliable materials for determination of the actual and true value of the assets. It may be that in a given year the written d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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