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TMI Blog1971 (7) TMI 47X X X X Extracts X X X X X X X X Extracts X X X X ..... e to resort to individual valuation of the assets and resorted to the " global valuation " of the assets, as permitted under section 7(2) of the Act on the basis of the balance-sheet of the company as at 31st December, 1956. The relevant provisions of section 7 of the Wealth-tax Act, 1957, may be conveniently set out at this stage : " 7. (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-sheet of such business as on the valuation date and making such adjustments therein as the circumstances of the case may require." The Wealth-tax Officer held: "As the accounts are audited and it is certified that the balance-sheet shows the true and cor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d got the book assets valued as at June 30, 1956, at the value of Rs. 2,63,15,524. This valuation was done by the U.P. Government for the purpose of granting State aid. Even the U. P. Government's letter dated 21st March, 1956, contemplated that the tangible assets of the company's jute mills shall be valued through an independent agency nominated by the State Government. We are of opinion that the creditor's valuation of the assets would be a correct index of the market value, since money was being advanced to the assessee-company against hypothecation of the assets of the company. This shows that the balance-sheet figure of Rs. 3,62,38,809 was really inflated. As mentioned by the Calcutta High Court, if one has to proceed to value the assets independent of the balance-sheet values, we can certainly accept the value determined by the U. P. Government, namely, Rs. 2,62,15,524. This value will be (sic) in Supreme Court in the case of Kesoram Industries and Cotton Mills Ltd., cited above. We direct that this value be substituted in place of the written down value and reduced by the amount of depreciation allowed or allowable from 30th June, 1956, to the end of the accounting year. " ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his submission, realising the weakness of his case on the first two questions, in view of the decisions of the Supreme Court in the cases of Commissioner of Wealth-tax v. Tungabhadra Industries Ltd. and the Commissioner of Wealth-tax v. Aluminium Corporation of India Ltd. did not, as he could not, advance his arguments on the first two questions seriously. His main contention before us has been that the Tribunal should not have relied on the valuation prepared on behalf of the U.P. Government. He has contended that the Tribunal should have proceeded to have valued each and every item of the assets as laid down under section 7(1) of the Act. He has relied on the decision of this court in the case of Commissioner of Wealth-tax v. Birla Jute Mfg. Co. Ltd. Mr. B. L. Pal, the learned counsel appearing on behalf of the department, had submitted that, in the facts of the instant case, grievance, if there be any, is actually that of the department. He submits that in the facts of the instant case, in view of the decision of the Supreme Court in the case of Kesoram Industries and Cotton Mills Ltd. v. Commissioner of Wealth-tax, the Tribunal should really have upheld the order of the Wealt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... value given of the fixed assets in the balance-sheet is artificially inflated. It is also open to the assessee to establish by acceptable reasons that the written down value of any particular asset represents the proper value of the asset on the relevant valuation date. In the absence of any material produced by the assessee to demonstrate that the written down value is the real value, the Wealth-tax Officer would be justified in a normal case in taking the value given by the assessee itself to its fixed assets in its balance-sheet for the relevant year as the real value of the assets for the purposes of the wealth-tax. It is a question of fact in each case as to whether the depreciation has to be taken into account in ascertaining the true value of the assets. The onus of proof is on the assessee who must produce reliable material to show that the written down value of the assets and not the balance-sheet value is the true value. If, therefore, the assessee merely claims that the written down value of the assets should be adopted but fails to produce any material to show that the written down value is the true value, the Wealth-tax Officer is justified in rejecting the claim and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s perfectly justified, in view of the decisions of the Supreme Court, in rejecting the assessee's contention that the written down value should be accepted. The decisions of the Supreme Court, to which we have referred, clearly lay down that the written down value, in a case where the balance-sheet figure is not acceptable, may be considered, provided there are sufficient materials to support the case that the written down value represents the correct value, and the onus of establishing that the written down value represents the correct value is entirely on the assessee. In the instant case, as we have already observed, the Tribunal was perfectly justified in rejecting the claim of the assessee, as the assessee had produced no materials to support its claim that the written down value represented the correct value and should be accepted. The further contention of the assessee that the Tribunal should have accepted the balance-sheet figure less the amount by which the said figure was inflated is equally unsound. It does not appear that there was any material to support the case that the balance-sheet figure was inflated by the amount claimed by the assessee. The Tribunal was satisfi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee to show that the written down value represents the true value and not the balance-sheet value. In the recent decision of a Bench of this court to which reference has been made by my learned brother in Commissioner of Wealth-tax v. Smt. Radha Debi M. Nopany, where the judgment was delivered by us on the 15th July, 1969, it is decided that neither the balance-sheet nor the written down value by itself may be a conclusive test on the facts of a particular case and it is open to the assessee or the revenue to challenge any one of these tests on the particular facts of a particular case. The question of onus would depend on whether on the records in each case there are facts which suggest that one or the other test should be applied. But the fact that I desire to emphasise in this case is that, in valuing assets under section 7 of the Wealth-tax Act, the object of the Wealth-tax Act should never be missed. The object is to find the value in the open market. Balance-sheet value and the written down value are not the only two methods of valuing the asset. I do not read section 7 of the Wealth-tax Act to mean that the valuation is confined always and invariably to these two met ..... X X X X Extracts X X X X X X X X Extracts X X X X
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