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TMI Blog1967 (8) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee is entitled to deduction of the sum of Rs. 6,66,931, the arrears of depreciation in each of the two years, and (2) whether the assessee is entitled to deduction of the sum of Rs. 4,70,220 being the income-tax liability in computing the net wealth in respect of 1957-58. The reference covers the assessment years 1957-58 and 1958-59. The assessee is a public limited company, which acquired the assets of E.D. Sassoon Co. Ltd., Bombay, for Rs. 40.65 lakhs in about June 1946. As on June 30, 1955, the full depreciation for the earlier years was not provided for. But the balance-sheet as on June 30, 1956, contained a note that arrears of depreciation up to the end of June 30, 1954, had not been provided and amounted to Rs. 10,58,833. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assets, he is bound by it. This is the contrary case. The assessee has not chosen to show the real value by allowing the depreciation by bringing the figures up-to-date in the books or the balance-sheet, having regard to the depreciation allowed. " On that reasoning it held that the allowance made by the Appellate Assistant Commissioner was not correct. The Tribunal also accepted the contention for the revenue that the allowance of Rs. 4,70,220 being the income-tax liability of the assessee in the first of the two years was inadmissible. In doing so, it thought that it was fortified by authority : Commissioner of Wealth-tax v. Pierce Leslie and Company Ltd. The second question referred to us is now settled by authority in favour o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovides for a different mode of ascertaining the value of the assets. Instead of determining separately the value of each asset, it permits the Wealth-tax Officer to determine the net value of the assets of the business as a whole. But he should do so having regard to the balance-sheet of such business as on the valuation date. Further, in making such determination he has to make such adjustments in the balance-sheet as the circumstances of the case may require. Clause (a) of sub-section (2) was amended by Act 46 of 1964, which we need not notice for present purposes. The valuation, as we said, of the assessee's assets has been made under section 7(2)(a). The contention for the assessee is that, while the Wealth-tax Officer determined the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regard to the balance-sheet, in which case he will make such adjustments as the circumstances of the case may require in such balance-sheet. Where allowance of depreciation is admissible, the written down value of the assets as given in the balance-sheet may of course be taken to represent the true and proper value. Where, however, depreciation allowance is not permissible, the book value of the asset as appearing in the balance-sheet of the company will again be normally taken as the proper value of the assets. In the process of arriving at the value of the assets under section 7(2)(a), the Wealth-tax Officer is not, however, necessarily and always bound by the figures in the balance-sheet. But when he departs from the figures given there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erly take only the figures as to the value of the assets as given in the balance-sheet, ignoring the statement therein that arrears of depreciation had not been provided for in the earlier period. We do not suggest that he is bound to the figures in the balance-sheet either as to the value of the assets or as to the quantum of the arrears of admissible depreciation. The point is that what he has got to determine being the value of the assets on the valuation date, once his attention is drawn to the fact that depreciation has not been taken into account in the valuation of assets as given in the balance-sheet, he has to apply his mind to the question of depreciation and make necessary adjustments therefor in arriving at the true value. If, o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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