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TMI Blog1969 (8) TMI 7X X X X Extracts X X X X X X X X Extracts X X X X ..... the respondent revalued its fixed assets and showed them in its balance-sheet as on March 31, 1956, at an increased value, creating a capital reserve of Rs. 1,73,92,556, corresponding to the increase in value after revaluation. In their report to the shareholders for the year ended March 31, 1956, the directors said : " During the year under review, your company's block assets have been revalued so as to indicate the true picture of their value and evaluators have given due consideration to depreciation which the buildings and plants and machinery have already been subjected to." In its balance-sheet as on March 31, 1957, that is, the corresponding valuation date for the assessment year 1957-58 for the purposes of wealth-tax, the value ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellate Assistant Commissioner confirmed the assessment. On further appeal the Appellate Tribunal approved of the action of the wealth-tax authorities in adopting the values as stated in the balance-sheet of the company as on March 31, 1957, incorporating the revaluation of the fixed assets as on March 31, 1956. The Appellate Tribunal, however, held that the respondent was entitled to an allowance of normal depreciation at the rates prescribed for income-tax on the recomputed value of the assets on account of wear and tear during the period that elapsed between the date of revaluation and March 31, 1957. On the applications of both the parties, the Appellate Tribunal stated a case to the High Court on the following questions of law : "(1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iness 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 ........" In Kesoram Industries and Colton Mills Ltd. v. Commissioner of Wealth-tax, the appellant-company had shown in its balance-sheet for the period ending March 31, 1957, the appreciated value of revaluation of the assets, after making certain adjustments, at Rs. 2,60,52,357, and had introduced in the capital reserve surplus a correspo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal has proceeded on the footing that the written down value should be treated as the basis of valuation in the first instance and has, therefore, misdirected itself in law. The High Court has committed the same error in answering the first question in the affirmative, in favour of the assessee. It is, therefore, necessary that the case must go back to the High Court for rehearing according to the principle of law laid down by this court in Kesoram Industries case. For these reasons we set aside the judgment of the High Court dated January 29, 1965, and remand the case for rehearing and determination in accordance with law. As the first question stands at present the answer must be given in the negative but it is open to the High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X
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