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TMI Blog1968 (7) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... ght in law in holding that the assessees were not entitled to a deduction in the computation of their net wealth for the assessment for 1958-59 of a sum of Rs. 38,42,337 as a deduction under section 7(2) of the Wealth-tax Act, being the difference between the book value and the written down value of the buildings, plant and machinery as on the valuation date, June 30, 1957, and of Rs. 23,11,939 in respect of the valuation date, June 30, 1958 ? 2. Whether, on the facts and in the circumstances of the case, the assessees were not entitled to a deduction of Rs. 1,19,748 being the liability on account of the wealth-tax payable for the assessments of 1957-58 and 1958-59 and of Rs. 76,505 in respect of the valuation date, June 30, 1958 ?" The second question in each of these references is now covered by authority, in the first by Kesoram Industries & Cotton Mills Ltd. v. Commissioner of Wealth-tax and in the second by H. H. Setu Purvati Bayi, Maharani of Travancore v. Commissioner of Wealth-tax, which is also in favour of the assessee. These questions are, therefore, answered in favour of the assessee. In each case, the assessee is a public limited company incorporated under the India ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustment on that basis could possibly be made. That assumption is, in our opinion, clearly wrong. Section 3 of the Act charges wealth-tax in respect of the net wealth on the valuation date of every individual, Hindu undivided family and company at the rate or rates specified in the Schedule. Net wealth has been defined to mean, in substance, the value of the assets, less debts entitled to deduction. Section 7, which occurs in the same Chapter as the charging section, prescribes the mode of valuing assets. The mode is two-fold, one is valuation of individual assets, separately on the basis of the estimate of the price which each asset would fetch if sold in the open market, and the other is what is known as the global method. The global method is adopted as a matter of convenience and, in view Of Section 211 of the Companies Act which prescribes that a balance-sheet shall give a true and fair view of the state of the affairs of the company, the balance-sheet is taken as the basis of valuation in this method, instead of valuing each asset separately. Sub-section (2)(a) enjoins the Wealth-tax Officer, where lie adopts to proceed on that basis, to determine the net value of the assets ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ness for which accounts are maintained by him regularly, the Wealth-tax Officer may determine the net value of the assets of the business as a whole, having regard to the balance-sbeet of such business as on the valuation date and make such adjustments therein as the circumstances of the case may require. But the power conferred upon the tax officer by section 7(2) is to arrive at a valuation of the assets, and not to arrive at the net wealth of the assessee. Section 7(2) merely provided machinery in certain special cases for valuation of assets, and it is from the aggregate valuation of assets that the net wealth chargeable to tax may be ascertained. The power conferred upon the tax officer to make adjustments as the circumstances of the case may require is also for the purpose of arriving at the true value of the assets of the business. Sub-section (2)(a) of section 7 contemplates the determination of the net value of the assets having regard to the balance-sheet and after making such adjustments as the circumstances of the case may require. It does not contemplate determination of the net wealth, because net wealth can only be determined from the net value of the assets by maki ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... obliged to consider the same. Strong reliance has been placed upon Loyal Textile Mills Ltd. v. Commissioner of Wealth-tax for the assessee and it is contended that, although in these cases the balance-sheet did not exhibit the written down value for purposes of income-tax, nevertheless, once the Wealth-tax Officer's attention is drawn to it, he is bound to consider the same. We do not think that the authority relied on supports the proposition. All that is pointed out in that case was that, since the written down value had been put down in the balance-sheet, though separately in it, the Wealth-tax Officer could not ignore it, and, without any further enquiry, insist upon proceeding on the book value of the assets given in the balance-sheet. We are prepared, of course, to accept that if, in addition to the Wealth-tax Officer's attention being drawn to the written down value of assets for purposes of income-tax, other materials are placed, which would convince the Wealth-tax Officer that adjustments ought to be made, he would not be at liberty to brush aside such material and still proceed only on the basis of the book value of the assets shown in the balance-sheet. Mr. V. Balasu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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