COMMISSIONER OF WEALTH-TAX, CALCUTIA, NOW WEST BENGAL II versus TUNGABHADRA INDUSTRIES LTD., CALCUTTA

Citation: [1970] 1 S.C.R. 789 · Decided: 08-08-1969 · Supreme Court of India · Bench: J.C. SHAH

Cited by 1 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

789 
A 
COMMISSIONER OF WEALTH-TAX, CALCUTIA, NOW 
WEST BENGAL II 
B 
c 
D 
E 
F 
G 
H 
v. 
TUNGABHADRA INDUSTRIES LTD., CALCUTTA 
August 8, 1969 
[J. C. SHAH, ACTING C.J., V. RAMASWAMI AND A. N. GROVER, JJ.] 
Wea/th Tax ACt, 1957. ss. 7(2)(a) and 27(6)-Va/uation of assets of 
·running business-Value as given in balance-sheet and written down value 
of dssets-Which tO be adopted for assessment-Assessee must 
produce 
material to show ihat value other than that shown in balance-sheet should 
be adopted-Duty bi Tribunal on receiving judgment of High Court or·· 
Supreme Court. 
The reSpondent: company 
was assessed to wealth-tax fOr the assess-
ment years 1957-58, 1958-59 and 1959-60. In computing the net wealth. 
of the respondent on the respective valuation dates the Wealth Tax Officer 
proceeded under s. 7(2) (a) of the Act and included the full value of the 
fixed assets as shown by the respondent in the res~ctive balance-sheets 
without any adjustment, after rejecting its contention that the fixed assets 
should be assessed at. their written down value as computed for the pill'· 
poses of mcome-tax. The Appellate Assistant Commissioner confirmed the 
valuation but the Income-tax Appellate Tribunal held that it would be fair 
in ,the circumstances of the case to adopt the written down value of the 
assetS as value thereof for all the years under appeal. On refer~ce being 
made to it under s. 27 ( 1) di the Wealth Tax Act the High Court held in 
favour of the respondent. The Revenue appealed, 
HELD : The rule of valuation on the basis of market value under 
s. 7 ( 1) of the Act may not yield a true estimate of the net value of the 
total assets in the case of a running business. The legislature has there-
• fore provided in sub-s. ( 2) (a) that when the assessee is carrying on a 
business for which accounts are maintained by him regularly, the Wealth· 
Tax Officer ma}'. determ,ine the net value df the business 
as a whole, 
having regard to the balance•sheet of such business 
as on the valuation 
date and make such· ·adjustments therein as the circumstances of the 
case may require. Thie power conferred upon . the tax officer to make 
adjustments as the J;ircumstances of the case may require is also for the 
purpose of arriving at , the true value of the assets of the business. It is 
of course open to the. assessee in any particular case to establish after pro-
ducing relevant materials . .that the value given of the fixed assets in the 
balance.sheet is artificially 
inflated. 
It is also open to the assessee 
to 
establish by acceptable: reasons that the written down value of any parti-
cular asset repres<!nts the proper value of the asset ·on the relevant valua-
tion date. In . the absence of any material produced by the assessee to 
demonstrate that the written down value is the real value the Wealth-tax 
Officer would be justified in a normal case in taking the value given by 
the assessee itself to its.fixed assets in the balance-sheet for the relevant 
year as the real value of tbe assets for the purposes of the Wealth-tax. It 
is a qu.Stion of f~ in each case as to whether the depreciation has to be 
taken into account in ascertaining the true value of the assets. The onus 
di proof is- on the assel!see who must produce reliable material to sb6w 
that the written down value of the assets and not the balancMbeet -'alue 
is the true value. [793 E-794 CJ 
790 
SUPREME COURT REPORTS 
[ 1970] 1 S.C.R. 
If, thorefore, the assessce merely claims that the written down of the 
assets should be adopted but fails to produce any material to show that 
written down value is the true value, the Wealth-tax Officer is justified 
in rejecting the claims and adopting the valuO! shown by the assessee him-
self in his balance.sheet as the true value of his assets. [794 C-D] 
· Kesoram Industries & Cotton Mills Ltd. v. Commissioner of Wealth· 
tax (Central) Calcutta, (1966) 59 I.T.R. 767, applied. 
(ii) Section 27(6) of the Act requires the Tribunal on receiving a 
copy of tho judgment of the Supreme Court or the High Court as the 
case may be to pass such ordeN as are necessary to dispose of the case 
conformably to such judgment. [794 E) 
If the Supreme Court agrees with the view of the Tribunal the appeal 
may be disposed of by a formal order. 
But if the Supreme Court dis-
agrees with the Tribunal on a question of law, the Tribunal must modify 
its order in the light of the order of the Supreme Court. rt the Supreme 
Court h

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