K.L. Roy, J. - (1.) In this reference under Sec. 27(1) of the Wealth -tax Act, 1957, the following two questions have been referred to this Court by the Income -tax Appellate Tribunal: (1) Whether on the facts and in the circumstances of the case the Tribunal, while determining the value of the fixed assets by recourse to Sec. 7(2)(a) of the Wealth -tax Act, 1957, was justified in making the adjustment for depreciation not provided for in the relevant accounts? (2) Whether on the facts and in the circumstances of the case the Assessee was entitled to the relief under Sec. 5(1)(xxi) of the Wealth -tax Act, 1957, in respect of the net wealth employed in its new rayon unit as at the two valuation dates?
(2.) The Assessee Messrs. Kesoram Industries and Cotton Mills Ltd. is a public limited company and the reference is in relation to its assessment to wealth -tax for the assessment years 1958 -59 and 1959 -60 for which valuation dates are March 31, 1957 and March 31, 1968, respectively. So far as the first question is concerned, an appeal was taken by the Assessee company from the decision of this Court on a similar question in respect of the assessment year 1957 -58, i.e. the immediate preceding year, to the Supreme Court. The decision of the Supreme Court is reported in Kesoram Industrial and Cotton Mills Ltd. v/s. Commissioner of Wealth -tax, West Bengal : (1966) 59 I.T.R. 767, and the facts may be stated from the judgment in that case: The Assessee company was incorporated under the Indian Companies Act sometime prior to 1.95.0 and the original cost of its fixed assets was Rs. 2,30,32,833; During the year ending March 31, 1950, the company made a revaluation of its assets and added an amount of Rs. 1,45,87,000 to the cost of the said fixed assets. After certain adjustments, the value of the fixed assets was determined at Rs. 2,60,52,357. The said fixed assets of the Assessee were shown in the balance -sheet issued by the Assessee from time to time at the added value less depreciation calculated on the original cost. In the balance -sheet of the relevant accounting year also, the said amount was shown as the value of the fixed assets. In computing the net wealth for the purposes of the Wealth -tax. Act, the Wealth -tax Officer accepted the said valuation of the fixed assets under Sec. 7(2) of the said Act rejecting the plea of the Assessee that each item of the assets -should be valued at the market rate under Sec. 7(1) thereof. The Assessee's appeals to the Appellate Assistant Commissioner and the Tribunal having failed the following question was referred at the instance of the Assessee to the High Court, viz. Whether on the facts and in the circumstances of the case the Wealth -tax Officer was justified in taking the value of the assets of the Assessee as shown in its balance -sheet on the relevant valuation date? The question was answered against the Assessee by this Court and on further appeal the Supreme Court made the following observations: Under this Sec. (viz. Sec. 7(2)) in the case of an Assessee carrying on business the Wealth -tax Officer may determine the net value of the assets of the business as a whole having regard to the balance -sheet of the business as on the valuation date. The balance -sheet, as indicated earlier, as on March 31, 1957, showed the appreciated value on revaluation of the assets at Rs. 2,60,52,357. As the value of the assets had increased, a corresponding balancing figures, viz., Rs. 1,45,87,000, was introduced in capital reserve surplus: that figure represented the increase in the value of the assets. It was argued that the revaluation was done for other purposes, that it did not represent the real value of the assets and that that fact was also reflected by the said amount representing the difference being shown as a capital surplus. Apart from the argument raised, there is nothing on the record to disclose why the said figure did not represent the correct value of the assets. We do not also see how the fact that the said increase was shown as capital surplus would detract from the correctness of the valuation, for the corresponding balancing figure had to be introduced in the balance -sheet.... When the Assessee himself has shown the net value of the assets at a figure, the Wealth -tax Officer, in our view, rightly accepted it, as no one could know better the value of the assets than the Assessee himself. It was open to the Assessee to convince the authorities that the said figure was inflated for acceptable reasons; but it did not make any such attempt. It was also open to the Wealth -tax Officer to reject the figure given by the Assessee and to substitute in its place another figure, if he was for sufficient reasons satisfied that the figure given by the Assessee was wrong. But he did not find any such reason to do so. When he accepted the figure shown by the Assessee himself, he did the right thing and there is nothing to complain about. The High Court was right in answering the first question in the affirmative.
(3.) For the assessment years under reference the balance in the capital reserve account had been reduced to Rs. 1,44,26,594. The Assessee contended before the Wealth -tax Officer that for the purpose of wealth -tax assessment, the book value of the assets should be ignored and instead of the depreciated value as taken for the purposes of income -tax assessment should be adopted. The Wealth -tax Officer rejected the said contention and computed the net wealth, of the Assessee on the basis of the value of the assets as disclosed in the company's relevant balance -sheet.;