9911796707
TMI Blog1970 (7) TMI 13X X X X Extracts X X X X X X X X Extracts X X X X ..... ment year 1959-60, the assessee closed its accounts on Asharh Sudi 9, Samvat 2015, which is the valuation date. The Wealth-tax Officer made an assessment of the net wealth of the assessee as on the aforesaid valuation date estimating the value thereof at Rs. 5,33,067. The Wealth-tax Officer adopted the value of the total assets of the business as disclosed in the balance-sheet, as on the aforesaid valuation date, at Rs. 6,70,617. The Wealth-tax Officer allowed certain deductions and computed the value of the movable assets at Rs. 4,70,574. The amount included a sum of Rs. 2,94,556 which represented the amount invested by the assessee family in its money lending business. The Wealth-tax Officer, it appears, estimated the value of the investm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned therein, while for all other assets, the provisions of section 7(1) would apply. The Tribunal observed that where an assessee carries on a business for which accounts are maintained regularly, the assets of the business shall be determined With reference to the balance-sheet figures. The relevant observation of the Tribunal may be reproduced below : " Where the assessee carries on a business for which accounts are maintained regularly, section 7(2) says that the Wealth-tax Officer may determine the net value of all the business having regard to the balance sheet of the said business. Even though the word used here is 'may', the class of assessees mentioned in section 7(2) is a separate category of assessees and it must be held that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y sold in the open market at par. It was urged on behalf of the assessee that investments in money-lending business were generally sold at fifty per cent. of the book value and, therefore, the Wealth-tax Officer was not correct in taking the value of the investments at the figure shown in the balance-sheet of the business The question postulated by the Tribunal should, therefore, have been related to the value of the investments in the business, assessed at Rs. 2,94,556, and not to the value of all the movable assets of the business, assessed at Rs. 4,70,574. Moreover, the question as framed by the Tribunal appears on the face of it to be a question of fact, because any question as to what is the correct value of an asset can hardly be rega ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the specified rates. The expression " net wealth ", occurring in section 3, has been defined in section 2(m) of the Act, to mean the aggregate value of all assets belonging to the assessee on the valuation date diminished by the aggregate value of all debts owed by the assessee on the same date. If there is no debt, the net wealth is assessable on the value of all the assets owned by the assessee. Section 7 lays down the mode in which the value of an asset may be determined for the purpose of computation of the net wealth. Sub-section (1) of section 7 says that the value of an asset, other than cash, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... difficult to determine the value of each individual asset separately by resort to the provisions of sub-section (1) of section 7.Sub-section (2) has been introduced as a non-obstante clause and not as a proviso carving out an exception to the substantive provision laid down in sub-section (1). We may point out incidentally that the expression " net value " used in sub-section (2)(a) appears to be meaningless. What is to be determined under section 7 is the total value of the assets of a business with a view to ultimately arrive at the value of the net wealth of the assessee. The expression " net value " of the assets would ordinarily mean the value of the assets as diminished by the liabilities thereon but section 7 as its rhetoric will sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mean either reduction or enhancement of the book value of the asset. Whether the Wealth-tax Officer should increase or reduce the book value of any particular item of asset of the business will-depend on the facts and circumstances of each case. In view of the fact that the Wealth-tax Officer misconceived the true implications of the provisions of section 7 of the Act while estimating the value of the investments in the money-lending business at the figure shown in the balance-sheet, we consider it necessary in the ends of justice to answer this reference by modifying the question framed by the Wealth-tax Officer. We reframe the question as follows : " Whether, on the facts and in the circumstances of the case, the Tribunal arrived at th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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