9911796707
TMI Blog1970 (7) TMI 13X X X X Extracts X X X X X X X X Extracts X X X X ..... valued at Rs. 4,70,574 ? " The material facts are -these: The assessee is a Hindu undivided family carrying on money-lending and other businesses. For the relevant assessment year 1959-60, the assessee closed its accounts on Asharh Sudi 9, Samvat 2015, which is the valuation date. The Wealth-tax Officer made an assessment of the net wealth of the assessee as on the aforesaid valuation date estimating the value thereof at Rs. 5,33,067. The Wealth-tax Officer adopted the value of the total assets of the business as disclosed in the balance-sheet, as on the aforesaid valuation date, at Rs. 6,70,617. The Wealth-tax Officer allowed certain deductions and computed the value of the movable assets at Rs. 4,70,574. The amount included a sum of Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7(2) of the Act and held that the two sections referred to different categories of assets. Section 7(2) applies, in the option of the Tribunal, to the class of assets mentioned therein, while for all other assets, the provisions of section 7(1) would apply. The Tribunal observed that where an assessee carries on a business for which accounts are maintained regularly, the assets of the business shall be determined With reference to the balance-sheet figures. The relevant observation of the Tribunal may be reproduced below : " Where the assessee carries on a business for which accounts are maintained regularly, section 7(2) says that the Wealth-tax Officer may determine the net value of all the business having regard to the balance sheet o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,94,556, while the contention of the assessee was that necessary adjustment should be made to the value in view of the fact that investments in money-lending business were hardly sold in the open market at par. It was urged on behalf of the assessee that investments in money-lending business were generally sold at fifty per cent. of the book value and, therefore, the Wealth-tax Officer was not correct in taking the value of the investments at the figure shown in the balance-sheet of the business The question postulated by the Tribunal should, therefore, have been related to the value of the investments in the business, assessed at Rs. 2,94,556, and not to the value of all the movable assets of the business, assessed at Rs. 4,70,574. Moreove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wealth-tax, Section 3, as it then stood, imposed a liability to pay wealth-tax on the net wealth on the valuation date, on every individual, Hindu undivided family and company at the specified rates. The expression " net wealth ", occurring in section 3, has been defined in section 2(m) of the Act, to mean the aggregate value of all assets belonging to the assessee on the valuation date diminished by the aggregate value of all debts owed by the assessee on the same date. If there is no debt, the net wealth is assessable on the value of all the assets owned by the assessee. Section 7 lays down the mode in which the value of an asset may be determined for the purpose of computation of the net wealth. Sub-section (1) of section 7 says that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion (I). This provision was, evidently, introduced for facility of computation of the value of the assets pertaining to a business in which the assets are numerous and it would be difficult to determine the value of each individual asset separately by resort to the provisions of sub-section (1) of section 7.Sub-section (2) has been introduced as a non-obstante clause and not as a proviso carving out an exception to the substantive provision laid down in sub-section (1). We may point out incidentally that the expression " net value " used in sub-section (2)(a) appears to be meaningless. What is to be determined under section 7 is the total value of the assets of a business with a view to ultimately arrive at the value of the net wealth of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the money-ending business if he considered it necessary to do so in the particular circums ta nces of the case. The word "adjustment" used in sub-section (2)(a) of section 7 may mean either reduction or enhancement of the book value of the asset. Whether the Wealth-tax Officer should increase or reduce the book value of any particular item of asset of the business will-depend on the facts and circumstances of each case. In view of the fact that the Wealth-tax Officer misconceived the true implications of the provisions of section 7 of the Act while estimating the value of the investments in the money-lending business at the figure shown in the balance-sheet, we consider it necessary in the ends of justice to answer this reference by m ..... X X X X Extracts X X X X X X X X Extracts X X X X
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