TMI Blog1967 (1) TMI 24X X X X Extracts X X X X X X X X Extracts X X X X ..... ance-sheet as an asset and said to have been paid as bonus to the employees for the year 1952-53 was a permissible deduction under the Wealth-tax Act ? (2) Whether, in the facts and circumstances of this case, the Appellate Tribunal was justified, while assessing the petitioner to wealth-tax under section 7(2) of the Wealth-tax Act, in directing that the value of the fixed assets should be determined by deducting from the total value of such assets the normal depreciation allowed under the Indian Income-tax Act in addition to the depreciation shown in the balance-sheet or else, whether the said Tribunal should have taken the value as shown in the balance-sheet ? (3) Whether the Appellate Tribunal's interpretation of the words 'set up', ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the assessee in its balance-sheet should be taken as binding on it. On appeal the Appellate Tribunal took a contrary view and held as follows : " The normal depreciation allowed under the Income-tax Act had been fixed on the basis of the normal wear and tear in those assets by user. The normal depreciation allowed should, therefore, be deducted in determining the block value of the assets. It is the written down value of the assets after deduction of the normal depreciation under the Income-tax Act that should be taken as the basis of valuation for the purposes of the Wealth-tax Act. " The result was that the assessee was permitted to claim by way of depreciation not only the sum shown in the balance-sheet but in addition the normal d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls Ltd. v. Commissioner of Wealth-tax, where the view taken by the Calcutta High Court in Kesoram Cotton Mills Ltd. v. Commissioner of Wealth-tax was affirmed. Their Lordships, on a construction of section 7(2)(a) of the Wealth-tax Act, held that where the assessee himself has in his balance-sheet shown the net value of his assets at a certain figure, after deducting the amount shown as depreciation, that figure may be taken as correct unless the assessee convinces the authorities that the figure was not acceptable. To quote their Lordships' words: "It was open to the assessee to convince the authorities that the said figure was inflated for acceptable reasons; but it did not make any such attempt. It was also open to the Wealth-tax Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as on the basis of an award given by the Industrial Tribunal which was confirmed by the Appellate Tribunal. But both the employees and the assessee had filed an appeal and cross-appeal before the Supreme Court against the decision of the Appellate Tribunal. During the pendency of the appeal and the cross-appeal the assessee paid the sum as bonus to its employees. But as it was challenging the right of the employees to claim that sum, it showed the said payment in its account as advance payment to the employees, such advance payment being in the nature of "debt due" thus became an asset. The Supreme Court reduced the amount of bonus by one-half and consequently the said sum of Rs. 7,89,611 became, in fact and in law, a mere advance payment b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, we answer the questions as below : Question No. 1: is answered in the affirmative. Question No. 3: is answered in the affirmative. Question No. 2: The value of the fixed assets as shown in the balance-sheet after deducting the depreciation is normally to be accepted as correct, unless the assessee convinces the taxing authorities that the figure shown as depreciation should not be accepted for good reasons, or else the taxing authorities are satisfied for sufficient reasons that the figures given by the assessee are incorrect. On the facts as mentioned in the order of the Tribunal, we must hold that the decision of the Tribunal on this point was not justified. But it will be open to the Tribunal to further decide this point in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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