1986 (9) TMI 110 - AT - Wealth-tax

Summary

Issues:
1. Addition of credit balance in the account of Smt. Swaran Kumari Sharma
2. Valuation of machinery for wealth tax purposes
3. Deduction under s. 5(1)(iv) for factory building blocks

Analysis:

Issue 1: Addition of credit balance in the account of Smt. Swaran Kumari Sharma
The appeals involved challenges to the addition of credit balance in the account of Smt. Swaran Kumari Sharma for multiple assessment years. The WTO treated the credit balance as the wealth of the assessee due to accumulated interest not paid to creditors. The AAC observed that the proceedings under s. 147 were pending, and the ITO was justified in including the credit in the wealth of the assessee. However, the second statement of the creditor was not considered by the authorities, leading the Tribunal to set aside the AAC's order and restore the additions for fresh determination after confronting the statements to the assessee.

Issue 2: Valuation of machinery for wealth tax purposes
The appeals also contested the valuation of machinery owned by the assessee for wealth tax purposes. The valuer appointed by the bank valued the machinery significantly higher than the balance sheet value. The assessee argued that the machinery was old with nominal value in the open market. Additionally, discrepancies in the valuation of assets, like bardana, were raised but not considered by the authorities. The Tribunal found that the WTO was justified in valuing the machinery separately but directed the AAC to reconsider the valuation of bardana and machinery, considering all submissions before making a determination.

Issue 3: Deduction under s. 5(1)(iv) for factory building blocks
The last ground of appeals concerned the deduction under s. 5(1)(iv) for the factory building blocks. The WTO allowed the deduction considering the factory building as a single unit, while the AAC split the building into various blocks and allowed deduction for one block only. The Tribunal held that the factory building should be considered as one unit, and the deduction allowed by the WTO was restored, disagreeing with the AAC's approach. Consequently, all appeals were treated as partly allowed for statistical purposes.

In conclusion, the Tribunal addressed the issues of addition of credit balance, valuation of machinery, and deduction for factory building blocks in a detailed manner, providing clarity on the legal interpretations and directing for fresh determinations where necessary.