P.B.Mukharji, J. - (1.) This statement of the case under the Wealth-tax Act at the instance of the Commissioner raises the following two questions for an answer by this court: "(i) Whether, on the facts and in the circumstances of the case, in determining the break-up value of the shares held by the assessee in Messrs. Hind Mills Ltd., the Income-tax Tribunal was justified in holding that the valuation of the depreciable assets of the company concerned should be based on their income-tax written down value in place of their balance-sheet value ? (ii) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that, in computing the break-up value of the shares of Messrs. Sri Hanuman Sugar Mills Ltd., the amount of Rs. 1,75,000, being proposed dividend, should be deducted ?"
(2.) We shall not tarry for a discussion of the second question which appears to us to be covered by the decision of a Division Bench of this court in Gift-tax Officer, Calcutta v. Kastur Chand Jain, [1964] 53 I.T.R. 411 (Cal.). Following that decision, the answer, therefore, to the second question is in the negative, in favour of the revenue.
(3.) It is the first question which requires some consideration before the answer is given. The facts giving rise to this question are simple and should be stated first. The assessee is an individual. She held 7,000 ordinary shares of the Hind Mills Ltd. of the face value of Rs. 10 each. These shares are admittedly not quoted on the stock exchange. The main point raised in the statement of the case in question No. 1 concerns the computation of the break-up value of these shares. The Tribunal accepted the assessee's contention that, in so far as the assets on which depreciation has been allowed for income-tax purposes, the written down value thereof should be adopted in place of their balance-sheet values. It is found as a fact that the company did not provide adequate or any depreciation and the reason given in the balance-sheet by the company was that there was paucity of profits. The Tribunal came to the conclusion that normal depreciation allowed under the Income-tax Act is a reasonable measure of wear and tear of plant, machinery and buildings, etc., for the purposes of business. It, therefore, came to the conclusion that the valuation of the depreciable assets with reference to the income-tax written down value as on the 30th June, 1959, to be the proper basis. Hence, the break-up value of the Hind Mills ordinary shares was computed accordingly. The assessment relates to the assessment year 1960-61 with the corresponding valuation date being the 10th October, 1959. The usual catena of cases on this point have been duly cited. They are, first, a Division Bench decision of this court in Commissioner of Wealth-tax v. Tungabhadra Industries Ltd., [1966] 60 I.T.R. 447, 453 (Cal.) and the observations made thereunder to the following effect: "While we agree that the written down value may not in all cases represent the real value of the assets, in normal cases it will give the Wealth-tax Officer a fair idea of its proper value unless the plant and machinery are of a rare type or are of a quality which is not generally available in India and for which there is a keen demand. No such uncommon feature is to be found in the case before us.";