9911796707
TMI Blog1981 (10) TMI 77X X X X Extracts X X X X X X X X Extracts X X X X ..... held by these three assessees in Collis Line (P.) Ltd. The dispute is confined to the value to be assigned to the ships held by the company as its fixed asset in the various years while applying rule 1D of the Wealth-tax Rules. It may be mentioned at the outset that this company was formed on 2-4-1969 and took over three ships, namely, as SS Anton, SS Effiginy and SS Radiant from Ambassador Steam Ships (P.) Ltd. This transfer was in a schedule to the compromise approved by the Kerala High Court as per order dated 2-4-1969 in OP No. 2 of 1969. These three ships had the written down values of Rs. 5,83,333, Rs. 9,09,550 and Rs. 16,44,521, in the books of the transferor company, namely, Ambassador Steam Ships (P.) Ltd. For the purpose of the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the cost of the ships to Ambassador Steam Ships (P.) Ltd. It is necessary to make this point clear because the learned chartered accountant who had represented the assessees before the AAC and who also assisted the learned counsel for the assessee, Shri Paripoornan, had stated that the written down values of these three ships in the case of the company, namely, Collis Line (P.) Ltd. were arrived at by deducting the depreciation admissible under the Income-tax Act from the values at which the ships have been transferred by Ambassador Steam Ships (P.) Ltd. to Collis Line (P.) Ltd. This particular position does not appear to subsist for the other ships that have been acquired by the company subsequent to its incorporation. 4. It was the cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of Collis Line (P.) Ltd. It is urged that the method of valuation for the purpose of gift-tax is in any event not relevant for the purpose of valuing the shares under the Wealth-tax Act where the shares in question have to be valued under rule 1D. It is pointed out that the Kerala High Court has held in the case of CWT v. Mammen Varghese [1980] 15 CTR (Ker.) 135 that rule 1D is mandatory and, therefore, there cannot be any departure from this for valuing the shares and no analogy can be drawn on the valuation made for the purpose of gift-tax assessment. It is further submitted that the valuation of the assets under rule 1D should be made in the same manner as the valuation of the liabilities as otherwise there would be a distorted picture ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ically for the purpose of granting and controlling allowance of depreciation. 7. We have carefully considered the submissions. We are of the opinion that the AAC was not correct in directing that the written down values of the ships as for the income-tax assessment should be adopted as the value of these assets for the purpose of applying rule 1D. We are unable to accept the arguments advanced on behalf of the assessee which found favour with the AAC that the assets appearing in the balance sheet are to be valued on a basis different from those appearing in the balance sheet, which basis is, it is accepted, to be adopted for valuing the liabilities. It has been held by the Kerala High Court in the case of Mammen Varghese that rule 1D is m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n reserve is treated are not reduced in value from year to year by the depreciation for each asset. The effect of sub-clause (c) of clause (ii) of Explanation II is, in our opinion, to adopt the value of the fixed asset as reduced by the depreciation that is written off or carried to a reserve account for the purpose of rule 1D, i.e., the asset is to be taken at the value shown in the balance sheet. We, therefore, consider that the AAC was in error in directing the WTO to adopt a value for the ships different from the value shown for them in the balance sheet. 8. Even accepting for the sake of arguments the submissions advanced on behalf of the assessee, we are unable to agree that in the circumstances, it is only the written down value a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reiterated in CWT v. Aluminium Corporation of India Ltd. [1970] 78 ITR 483 (SC). In this decision, though it was with reference to section 7(2)(a) it has been held that the book value of the assets in the balance sheet and not the written down value should be taken as the primary basis of valuation and only if adjustment is required they may be made. We, therefore, do not accept the submissions advanced on behalf of the assessees here that the written down value for the purpose of income-tax assessments should be adopted as the value of these assets, namely, the ships held by the company, Collis Line (P.) Ltd. for the various assessment years. The order of the AAC is reversed and the order of the WTO on this are restored. The appeals are al ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
