9911796707
TMI Blog1967 (8) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... reference covers the assessment years 1957-58 and 1958-59. The assessee is a public limited company, which acquired the assets of E.D. Sassoon & Co. Ltd., Bombay, for Rs. 40.65 lakhs in about June 1946. As on June 30, 1955, the full depreciation for the earlier years was not provided for. But the balance-sheet as on June 30, 1956, contained a note that arrears of depreciation up to the end of June 30, 1954, had not been provided and amounted to Rs. 10,58,833. The break-up of the arrears of depreciation showed, for normal depreciation plus shift allowance Rs. 7,46,125, extra depreciation Rs. 70,689 and initial depreciation Rs. 1,11,814, making a total of Rs. 9,28,628. The Wealth-tax Officer assessed the value of the wealth for the two yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he allowance made by the Appellate Assistant Commissioner was not correct. The Tribunal also accepted the contention for the revenue that the allowance of Rs. 4,70,220 being the income-tax liability of the assessee in the first of the two years was inadmissible. In doing so, it thought that it was fortified by authority : Commissioner of Wealth-tax v. Pierce Leslie and Company Ltd. The second question referred to us is now settled by authority in favour of the assessee. Mr. Balasubrahmanyan for the revenue has conceded this in view of Kesoram Industries & Cotton Mills Ltd. v. Commissioner of Wealth-tax. On the first question the relevant provisions of the Wealth-tax Act, 1957, are these. Section 3 is the charging section. It says that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business as on the valuation date. Further, in making such determination he has to make such adjustments in the balance-sheet as the circumstances of the case may require. Clause (a) of sub-section (2) was amended by Act 46 of 1964, which we need not notice for present purposes. The valuation, as we said, of the assessee's assets has been made under section 7(2)(a). The contention for the assessee is that, while the Wealth-tax Officer determined the net value of the assets as a whole with reference to the balance-sheet of the company, he failed to make due adjustments therein for arrears of unprovided for depreciation for the period prior to June 30, 1964. We think the contention is well-founded. What the Wealth-tax Officer is called upon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e true and proper value. Where, however, depreciation allowance is not permissible, the book value of the asset as appearing in the balance-sheet of the company will again be normally taken as the proper value of the assets. In the process of arriving at the value of the assets under section 7(2)(a), the Wealth-tax Officer is not, however, necessarily and always bound by the figures in the balance-sheet. But when he departs from the figures given therein, it is obvious that he has got to indicate why he does so. In that case, he will have to make necessary and reasonable adjustments in the balance-sheet and arrive at the true value of the assets as a whole. The Calcutta High Court held in Commissioner of Wealth-tax v. Tungabhadra Industries ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assets or as to the quantum of the arrears of admissible depreciation. The point is that what he has got to determine being the value of the assets on the valuation date, once his attention is drawn to the fact that depreciation has not been taken into account in the valuation of assets as given in the balance-sheet, he has to apply his mind to the question of depreciation and make necessary adjustments therefor in arriving at the true value. If, on doing so, he comes to the conclusion on proper reasons that there has been or could have been no admissible depreciation during the relative period, he would well be entitled to proceed on that basis. In this case, the Tribunal noted the fact that there were the arrears of depreciation not prov ..... X X X X Extracts X X X X X X X X Extracts X X X X
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