COMMISSIONER OF WEALTH TAX, WEST BENGAL versus ALUMINIUM CORPORATION LTD.

Citation: [1972] 1 S.C.R. 484 · Decided: 30-08-1971 · Supreme Court of India · Bench: K.S. HEGDE · Disposal: Appeal(s) allowed

Judgment (excerpt)

,, 
484 
COMMISSIONER OF WEALTH TAX, WEST BENGAL 
A 
v. 
ALUMINIUM CORPORATION LTD. 
August 30, 1971 
[K. s. HEGDE AND A. N. GROVER, JJ.] 
Wealth Tax Act (27 of 1957), s. 7(2)-Value of assets as shown in 
ba}imce-sheet-Whether should be accepted-Deprecia1ion, if permis-
sible. 
Practice and Procedur~Remand by Supreme 
Court-High Court 
examining competency of Supreme Court--Propriety. 
The assessee-company m~de a revaluation of its assets, namely, land, 
buildings; plant and machinery in 1956, and the increase in value was 
carried over to subsequent years. 
For the assessment year 1957-58, on 
the questions, ( 1) whether in determining the net value of the assets under 
s. 7(2) of the Wealth Tax Act the value as shown in the balance sheet 
should be substituted by the written down value as per the income tax re-
cords, and (2) whether, even on the basis of the value as shown in the 
balance sheet an adjustment on account of normal depreciation of the 
assets for arriving at the net value is justified, the High Court, on refe-
rence, answered the first question in favour of the assessee and did not 
answer the second question. 
This Court, on appeal, set aside that judg-
ment and remanded the case to the High Court. 
Meanwhile, the High 
Court, for the assessment years 1958-59 and 1959-60, also on reference 
answered the first question in favour of the asscssee and did- not answ1:r 
the second question. 
After remand, with respect to the assessment year 1957-58, the High 
Court, answered the first question in favour of the Revenue and the second 
question in favour of the assessee~ 
In appeal to this Court, with respect to all the three assessment years,. 
HELD : 
(1) (a) Wealth Tax is levied pn the value of the assets of 
the assessee on the valuati.on date. 
Section 7(2) of the Wealth Tax Act 
requires the Wealth Tax Officer to have regard to the balance sheet. It is 
open to the assessee to satisfy the authorities that the valuation in the 
balance sheet is not correct, but, in the absence of such proof, the Wealth 
Tax Officer will be justified in proceeding on the basis that the value shown 
in the balance-sheet i~ correct, because, no one can know the value of the 
assets of a business better than those who are in charge of the business. 
(488 D-F] 
Therefore. in the present case, the revaluation of the assets made in 
1956, undoubtedly afforded a sound basis for valuing the assessee's assets 
in the absence of any evidence showing that it was 
incorrect, 
and 
the 
answer to the first question for all the three years should be in favour of 
the Department. The High Court was in error in holding that the evi-
dence afforded by the balance sheet could not be considered as prima facie_ 
evidence of the value of the assets. [488 F-H] 
'· 
C.l.T. West Bengal v. 
Aluminium Corporation, 
78 I.T.R. 
483 
B 
c 
D 
E 
F 
G 
(S. C.) and Kesoram Industries Case, 59 I. T. R. 767 (S. C.), followed. 
H 
(2) But the assets in the present case were subject to wear and tear and 
there was no evidence to show that the market value of these assets had 
gone up after the revaluation in 1956. Hence, when the value of the 
( 
\ 
) 
\ 
i 
i 
I 
A 
B 
c 
D 
E 
G 
H 
COMMR., WEALTH TAX v. ALUMINIUM CORP. (Hegde, J~) 485 
assets had to be determined on the concerned valuation dates, the Wealth 
Tax Officer should have deducted from the 1956 valuation the value of 
the depreciation of those assets 
after the 
revaluation. Therefore, the 
.mswer to the second question for all the three years should be in favour 
of the assessee. [488 H; 489 A-BJ 
CIVIL APPELLATE JURISDICTION: 
Civil Appeals Nos. 1691 
<md 1962 of 1968 and 1075 of 1971. 
Appeals by certificate/special leave from the judgments and 
orders dated August 18, 1967 and May 7, 1970 oi the Calcutta 
High Court in Matters Nos. 298 of 1963 and 69 of 1962. 
S. C. Manchanda, R. N. Sachthey, B. D. Sharma and S. P. 
Nayar, for the appellant (in all tha appeals). 
B. Sen, N. R. Khaitan, B. P. Maheshwari and 0. P. Khaitan, 
for the respondent (in all the appeals). 
The Judgment of the Court was delivered by 
Hegde, J, 
Civil Appeals Nos. 1691~1692 of 1968 are by 
certificate and Civil Appeal No. 107 5 of 1971 is by specJal leave. 
These appeals are brought by the Commissioner of Wealth Tax, 
West Bengal. 
In all these appeals we are dealing with the case 
of th.e same assessee, namely Aluminium CorporatiQil Ltd. 
The 
relevant assessment years are 1957-58, 1958-59 and 1959-60 
and the mat

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