9911796707
TMI Blog1975 (7) TMI 51X X X X Extracts X X X X X X X X Extracts X X X X ..... assets. For both these years the Wealth-tax Officer adopted the balance-sheet values of these assets rejecting the assessee's contention that the values should have been taken according to the depreciation to be provided in accordance with the Indian Income-tax Act. The balance-sheet figures of the fixed assets were higher than the written down values of the assets in accordance with the provisions of the Indian Income-tax Act. That was because the assessee had provided for depreciation at rates lower than those allowed under rule 8 of the Income-tax Act. In an appeal by the assessee for the assessment year 1957-58 the Appellate Assistant Commissioner accepted the contention of the assessee while for the assessment year 1958-59, the Appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowed by the department for textile machinery in the Income-tax Depreciation Schedule have been evolved after careful consideration and must be regarded as the fruit of experience after considering the position of textile mills in various parts of the country over a series of years. We are unable to hold in this particular assessee's case that machinery did not depreciate according to the rates which have been accepted in the generality of cases of textile mills. As regards the insurance of the assets for the amount of Rs. 1,45,00,000 the Tribunal, inter alia, stated that no material was bought forward to establish that the assets were so heavily insured because the depreciable assets had gone up in value. On the contrary, a reference wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that it is a fixed block of assets insured for an amount which is more than the market value thereof. Mr. Joshi also referred to two decisions of the Supreme Court in the case of Commissioer of Wealth-tax v. Aluminium Corporation of India Ltd. and Commissioner of Wealth-tax v. Aluminium Corporation of India Ltd. and submitted that the book value of the assets in the balance-sheet was to be taken into account under the global method of valuation under section 7(2)(a) of the Act and it was permissible to make such adjustment in the valuation as given in the balance-sheet as the circumstances of the case required it to be done. The assessee-company is a textile mill and the machinery employed in the mill was nearly more than 15 to 20 years ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s when the company had revalued the same after making certain adjustments. When such was the position, the court held that section 7(2)(a) of the Act contemplates that the book value in the balance-sheet should be taken as the primary basis of valuation and if any adjustment is required the Wealth-tax Officer may make such adjustments in the valuation as given in the balance-sheet as the circumstances of the case require it to be done. In view of the principle therein laid down the matter was remanded for rehearing and determination of the market value in accordance with law. After remand, when the matter was heard by the Supreme Court, the Supreme Court held in Commissioner of Wealth-tax v. Aluminium Corporation of India Ltd. that, in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ethods mentioned in section 7 of the Act, viz., he may either determine the market value of the assets under sub-section (1) of section 7 or he may proceed on the global valuation basis of valuing the assets of the business as a whole under sub-section (2) of section 7. If he proceeds to make the valuation on the global valuation basis under sub-section (2), he must take the balance-sheet of the business as the basis for making the valuation and make such adjustments as he considers necessary. In that case, in valuing the assets of the assessee's business for purposes of wealth-tax the Wealth-tax Officer proceeded under sub-section (2) of section 7 and took the book value of the assets shown in the balance-sheet, viz., Rs. 21,56,655, as the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... then the depreciation as permissible under the Income-tax Act had to be adjusted in order to determine the market value at the relevant valuation date and this is what the Tribunal has done in the present case and we find no reason why the method adopted by the Tribunal cannot be regarded as a correct one. It was, however, urged by Mr. Joshi, that in the directors' report the assets were insured against fire and riot risks for the amount of Rs. 1,45,00,000. Actually, there was no material whatsoever brought on record by either of the parties to indicate on what basis such a valuation was arrived at. Merely because the assets were so valued it will not be proper to come to the conclusion that the amount represented the correct value of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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