9911796707
TMI Blog1976 (3) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... ch, 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 the depreciable assets of the assessee-company by substituting the written down value of the assets computed under the Indian Income-tax Act for the value as shown in the balance-sheet ? The facts appearing from the statement of the case as well as the various orders annexed therewith are briefly as follows : The assessee claimed before the Wealth-tax Officer that in comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 proper to accept the written down value of the assets as worked out for the purposes of the Income-tax assessments." The Tribunal, therefore, directed the Wealth-tax Officer to adopt the written down value of the assets as the value thereof for inclusion in the net wealth for all the years under reference. At the instance of the Commissioner of Wealth-tax the question set out ea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nces 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 and to make such adjustments therein as the circumstances of the case may require. The object of the Wealth-tax Officer in determining the value of the assets under section 7 is to arrive at the true value of the assets of the business. If what has been shown in the balance-sheet is not the true value of the assets disclosed, it is open to the assessee to satisfy the Wealth-tax Officer by prod ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 these appeals is squarely covered by the above decision. Even so, Mrs. Leila Seth submits that in the instant case it is admitted that adequate depreciation could not be provided for in the balance-sheet in regard to the depreciable fixed assets on account of paucity of profits and hence the depreciation as provided in the balance-sheet was much lower than the depreciation allowable. According to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aring 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 the balance-sheet and whether the Written down value computed under the Indian Income-tax Act in fact represents the lower value. It is open, as observed by this court in the case of Tungabhadra Industries, to establish after producing relevant material that the value of the fixed assets in the balance-sheet is artificially inflated. Further, in case the wants the written down value to be accepted, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 down value may be the real value of the assets but that cannot be the inexorable rule in determining the value of the assets under section 7 of the Act. Mrs. Seth drew our attention to a decision of the Calcutta High Court in Commissioner of Wealth-tax v. Mohan Lal Nopany. This was a case of break-up value of certain shares of a company. There was material in that case to indicate that the balance- ..... X X X X Extracts X X X X X X X X Extracts X X X X
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