TMI Blog1990 (1) TMI 49X X X X Extracts X X X X X X X X Extracts X X X X ..... is a hotel building. Each of the assessees also has one-fourth share holding as co-owner in respect of the building known as Himalaya Talkies. These assets were valued for the year ending on March 31, 1975, at Rs. 27,64,500 in respect of the hotel building and at Rs. 6,46,600 in respect of the talkies. The Wealth-tax Officer computed the market value of these assets on the basis of the valuation report and brought to tax a sum of Rs. 1,61,500 as one-fourth share in Himalaya talkies and a sum of Rs. 3,45,024 as one-fourth value of the hotel building by name "Hotel Hindustan", in addition to what was shown by the assessees. Against the said assessment, each of these assessees filed appeals before the Appellate Assistant Commissioner who co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he authority concerned, the whole assessment is wrong and the orders of the appellate authority as well as the Tribunal, which blindly accepted the assessment made by the first authority require reconsideration at our hands. It is well-settled that, in matters arising under the provisions of the Act, the basis of valuation is as set out in section 7 of the Act, which is to the effect that all assets, other than cash, must be valued at market price that is the value the assets would fetch if sold in the open market. Though this is the normal rule, there are certain well-known exceptions, one of them being that, in respect of a business asset under section 7(2)(a) of the Act, the valuation thereof must be in the light of the latest availabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer to deter mine the net value of the assets of the business as a whole having regard to its balance-sheet as on the valuation date, instead of proceeding under sub-section (1). In other words, it is optional for the Wealth-tax Officer to resort to either of the methods even in the case where the net value of the business carried on by the assessee is to be determined. Thirdly, even when he proceeds under sub-section (2), he has to determine the net value of the business as whole having regard to the balance-sheet of such business as on the valuation date ; the phrase 'having regard to the balance-sheet of such business' as judicially interpreted means that the Wealth-tax Officer has to take into consideration or account the balance-s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in J. K. Bankers' case [1984] 145 ITR 485 (SC) that the balance-sheet is not sacrosanct. Therefore, the balance-sheet becomes the starting point for purposes of valuation and it is permissible to value some of the assets appearing in the balance-sheet under section 7 (1 ) and in regard to the rest of the assets to take the balance-sheet value. Thus, the provisions of section 7 of the Act which provide for valuation on the basis of the market value as well as on the basis of the balance-sheet value are not mutually exclusive. In cases where the balance-sheet value does not represent the real or market value, the balance-sheet value may be adjusted as is clear from the decision in CWT v. Tungabhadra Industries Ltd. [1966] 60 ITR 447 (Cal). ..... X X X X Extracts X X X X X X X X Extracts X X X X
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