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1987 (1) TMI 136

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..... ear 1979-80 the assessee had shown negative figure of Rs. 8,45,816 as net wealth in respect of this proprietary concern as on 30-5-1978. The WTO noticed that though the net book value of most of the motion pictures in a film distribution concern was nil by virtue of operation of rule 9B of the Income-tax Rules, 1962 (which allows amortization at the rate of 100 per cent if the film is run for 90 days in the previous year), according to the WTO the film still had considerable market value. The WTO valued the assessee's rights in the films at Rs. 38,14,500 out of which he allowed deduction at the rate of 25 per cent for depreciation and determined the net value at Rs. 28,50,875. He further added Rs. 14,32,098 in respect of seven new pictures .....

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..... ruled CWT v. Vysyaraju Badreenarayana Moorthy Raju [1971] 79 ITR 330 (Ori) and A. T. Mirji v. CWT [1980] 126 ITR 93 (Kar.) 7. The learned counsel for the assessee urged that though the Supreme Court in Vysyaraju Badreenarayana Moorthy Raju's case had overruled A. T. Mirji's case on which the Tribunal, Special Bench, Bombay in N. M. Shah v. Second WTO [1982] 1 SOT 573 had relied and which the Special Bench had been followed by the Delhi Special Bench in Narenar Kumar Gupta's case, still neither the Supreme Court in Vysyaraju Badreenarayana Moorthy Raju's case nor the Calcutta High Court in Dipti Kumar Basu's case had considered the applicability of rule 2C of the Wealth-tax Rules, 1957 ('the Rules') which had been considered in N. M. Shah' .....

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..... h basis, interest due on accrual basis, though not realised, on the outstanding of the money-lending business carried on by the assessee, is liable to be included in the net wealth of the assessee. 8. Thus, we do not have to go to rule 2C for deciding that the valuable rights of the assessee in the films of which the assessee was the distributor, have to be included in the assessee's net wealth. If the assessee has not included in the assessee's net wealth. If the assessee has not included the value of such assets in the balance sheet, then the balance sheet is defective to that extent as was noted by the Special Bench, Delhi in 53 Narendra Kumar Gupta's case at page 701 relying on CIT v. A. Krishnaswami Mudaliar [1964] 53 ITR 122 where t .....

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..... therefore, would be entitled to make adjustment in the balance sheet both under section 7(2) (a) as well as under rule 2C. 10. In N. M. Shah's case, the Special Bench in paragraph 7 has given a number of definitions of balance sheet but the upshot of all the definitions is that the balance sheet is a classified summary of assets and liabilities and all other balances. Thus, the assessee is required to disclose in his balance sheet the value of the pictures as distributor or as owner, not disclosing the same in the balance sheet would only show that the balance sheet is not complete. We may also observe that balance sheet in cash system of accounting is an anti-thesis because in the cash system only cash can be disclosed and no other asse .....

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..... ilms had been rightly computed by the WTO. We give similar directions for the assessment years 1979-80 and 1980-81. 13. Similar are our directions regarding valuation of the assessee's interest in Saishyam Pictures for the two years. 14. In the result, the revenue's appeal for the assessment years 1979-80 is allowed. 15. In the assessment year 1980-81 grounds 1 and 2 are covered by our combined order above. 16. Ground No. 3: Credit balance in the CDS account is includible in the assessee's hands following Smt. Sushilaben A. Mafatlal v. WTO [1986] 18 ITD 189 (Bom.) (SB). We accordingly vacate the Commissioner (Appeals) order deleting the same and restore the WTO's order on this point. 17. Ground No. 4: The Commissioner (Appeals) di .....

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