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TMI Blog1968 (7) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... e Wealth-tax Act, being the difference between the book value and the written down value of the buildings, plant and machinery, as on the valuation date June 30, 1956 ? 2. Whether the assessee was entitled to a deduction of Rs. 8,07,852, being the liability for payment of tax ? " In the other reference the questions are : " 1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the assessees were not entitled to a deduction in the computation of their net wealth for the assessment for 1958-59 of a sum of Rs. 38,42,337 as a deduction under section 7(2) of the Wealth-tax Act, being the difference between the book value and the written down value of the buildings, plant and machinery as on the valuation date, June 30, 1957, and of Rs. 23,11,939 in respect of the valuation date, June 30, 1958 ? 2. Whether, on the facts and in the circumstances of the case, the assessees were not entitled to a deduction of Rs. 1,19,748 being the liability on account of the wealth-tax payable for the assessments of 1957-58 and 1958-59 and of Rs. 76,505 in respect of the valuation date, June 30, 1958 ?" The second question in each of these re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not ex facie set out the written down value of the assets. We may at once say that we are unable to accept the view the Tribunal has taken in these cases. The revenue as well as the Tribunal apparently proceeded on the basis that in valuing assets on a global basis under section 7(2)(a), the balance-sheet should invariably be adhered to, no individual assets could be separately valued for any reason and that no adjustment on that basis could possibly be made. That assumption is, in our opinion, clearly wrong. Section 3 of the Act charges wealth-tax in respect of the net wealth on the valuation date of every individual, Hindu undivided family and company at the rate or rates specified in the Schedule. Net wealth has been defined to mean, in substance, the value of the assets, less debts entitled to deduction. Section 7, which occurs in the same Chapter as the charging section, prescribes the mode of valuing assets. The mode is two-fold, one is valuation of individual assets, separately on the basis of the estimate of the price which each asset would fetch if sold in the open market, and the other is what is known as the global method. The global method is adopted as a matter of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alance-sheet was inflated for acceptable reasons. Since factually the assessee did not make any such attempt, the result was the figure in the balance-sheet as to the valuation of the assets on global basis prevailed. Shah J., who delivered the minority judgment, concurred with that opinion and pointed out : "The legislature has, therefore, provided in sub-section (2)(a) that where the assessee is carrying on a business for which accounts are maintained by him regularly, the Wealth-tax Officer may determine the net value of the assets of the business as a whole, having regard to the balance-sbeet of such business as on the valuation date and make such adjustments therein as the circumstances of the case may require. But the power conferred upon the tax officer by section 7(2) is to arrive at a valuation of the assets, and not to arrive at the net wealth of the assessee. Section 7(2) merely provided machinery in certain special cases for valuation of assets, and it is from the aggregate valuation of assets that the net wealth chargeable to tax may be ascertained. The power conferred upon the tax officer to make adjustments as the circumstances of the case may require is also fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee exhibits the book value in the balance-sheet and does not show in it the written down value of the assets relevant for purposes of income-tax, the Wealth-tax Officer, if there is nothing more, has to act on the balance sheet and determine the value of the assets on that basis. It is only where proper materials are placed before the Wealth-tax Officer to establish circumstances which call for adjustment that lie is obliged to consider the same. Strong reliance has been placed upon Loyal Textile Mills Ltd. v. Commissioner of Wealth-tax for the assessee and it is contended that, although in these cases the balance-sheet did not exhibit the written down value for purposes of income-tax, nevertheless, once the Wealth-tax Officer's attention is drawn to it, he is bound to consider the same. We do not think that the authority relied on supports the proposition. All that is pointed out in that case was that, since the written down value had been put down in the balance-sheet, though separately in it, the Wealth-tax Officer could not ignore it, and, without any further enquiry, insist upon proceeding on the book value of the assets given in the balance-sheet. We are prepared, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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