TMI Blog1969 (8) TMI 7X X X X Extracts X X X X X X X X Extracts X X X X ..... MY. JUDGMENT The judgment of the court was delivered by RAMASWAMI J.-- This appeal is brought from the judgment of the Calcutta High Court dated January 29, 1965, in Wealth-tax Matter No. 69 of 1963, by certificate granted under section 27(1) of the Wealth-tax Act, 1957 (hereinafter referred to as the "Act"). The respondent is a public company doing business in the manufacture of aluminium goods. For the accounting period ending March 31, 1956, 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 Marc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he written down value as computed for income-tax purposes before revaluation should have been adopted as the value of the assets. Nor did he allow depreciation at rates applicable for income-tax purposes for the period from the date of revaluation up to March 31, 1957, since he found that the values stated in the balance-sheet were arrived at by the respondent after taking into consideration such depreciation as it considered to be reasonable. In appeal, the Appellate 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e answer to the first question, the second question did not arise. Section 7 of the Act, stood as follows at the material time : " (1) The value of any asset, other than cash, for the purposes of this Act, shall be estimated to be the price which, in the opinion of the Wealth-tax Officer, it would fetch if sold in the open market on the valuation date. (2) Notwithstanding anything contained in sub-section (1),-- (a) where the assessee is carrying 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- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in holding that the case was governed by the principle laid down in Tungabhadra Industries case. As we have already shown, section 7(2)(a) of the Act contemplates that the book-value in the balance-sheet should be taken as the primary basis of valuation and if any adjustment is required the Wealth-tax Officer may make such adjustments in the valuation as given in the balance-sheet as the circumstances of the case require it to be done. In the present case, the Appellate 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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