Net Worth - Definition / Legal Terminology - Income Tax

Definition of Net worth Explanation 1 .- For the purposes of section 50B of the Income tax Act 1961, Net worth - shall be the aggregate value of total assets of the undertaking or division as reduced by the value of liabilities of such undertaking or division as appearing in its books of account: Provided that any change in the value of assets on account of revaluation of assets shall be ignored for the purposes of computing the net worth. Net worth The definition of net worth in the book, Cost and Management Accounting for Students by J. Batty, reads as follows Net worth: A concept denoting excess of the book value of all assets over liabilities. In a company it represents the interest of the shareholders, i.e., the paid up share capital and reserves. If the assets are taken at current values instead of book values, the concept is known as current worth. In the Dictionary for Accountants by Eric L. Kohler , the definition of net worth reads as follows: Net worth : The aggregate appearing on the accounting records of the equities representing proprietary interests ; the excess of the going-concern value of assets over liabilities to outsiders; of a corporation the total of paid-in-capital, retained earnings, and appropriated surplus of a sole proprietorship, the proprietor s account, of a partnership, the sum of the partners accounts. A British equivalent sometimes employed is total equity-stockholders equity. In Black s Law Dictionary , 5th Edn. (1939), Net Worth is defined at p. 939 as: Net Worth: Net worth of a corporation may be determined by subtracting liabilities from assets or by adding the capital account and surplus account as reflected in general ledger of corporation. Eastern Capital Corporation v. Freeman, 10 Misc. 2d. 412, 168, N.Y.S. 2d. 834, 838. MAHINDRA MAHINDRA LIMITED AND OTHERS VERSUS UNION OF INDIA AND OTHERS (AND OTHER WRIT PETITIONS) - 1982 (5) TMI 21 - DELHI HIGH COURT