Case: Commissioner of Wealth Tax, West Bengal Vs. Aluminium Corporation of India Limited

be their written down value as per the income-tax records and not the value shown by the assessee in its balance-sheets3. The department appealed to the Tribunal against the order of the Appellate Assistant Commissioner. The Tribunal allowed the appeal partially. It upheld the action of the Wealth-tax Officer in determining the value of the fixed assets on the basis of the values shown in the balance-sheets of the company, but it, however, held that the assessee was entitled to an allowance in respect of these assets on account of wear and tear during the period subsequent to the revaluation. Thereafter, at the instance of the assessee as well as the Commissioner, the Tribunal stated a case and submitted the following questions seeking the opinion of the High Court"(1) Whether, on the facts and in the circumstances of the case, in determining the net value of the assets of the assessee-company under section 7(2) of the Wealth-tax Act, the value of the companys fixed assets as shown in its balance-sheet as on the valuation dates should have been substituted by the written down value of those assets as per the companys income tax records ? (2) If the answer to the first question is in the negative, whether on the facts and in the circumstances of the case, for the purposes of determining the net value of the assets of the company under section 7(2) of the Wealth-tax Act an adjustment on account of normal depreciation of the fixed assets from the date of revaluation of the assets to the valuation dates was justified ?" 4. Now reverting back to the assessment of the assessee for the assessment year 1957-58, we have earlier noted the decision of the High Court. Aggrieved by the answer given by the High Court on the second question the Commissioner has brought Civil Appeal No. 1075 of 1971. The assessee has not appealed against the decision of the High Court on the first questionBefore adverting to the merits of the contentions of the parties, we consider it necessary to observe that we are wholly unable to comprehend the attitude of the High Court while dealing with the case. The High Court quite clearly exceeded its jurisdiction in examining the competence of this court to remand an appeal brought to this court under the provisions of the Wealth-tax Act. It would have done well to remind itself that it was bound by the orders of this court and could not entertain or express any argument or views challenging their correctness. The judicial tradition and propriety required that court not to attempt to sit on judgment over the decisions and orders of this court 5. Now turning to the second question referred to the High Court, we agree with the High Court that the valuation of the assets shown in the balance-sheet is not conclusive. Wealth-tax is levied on the value of the assets of the assessee on the valuation date. Section 7(2) of the Wealth-tax Act merely requires the Wealth-tax Officer to have regard to the balance-sheet. It is open to the assessee to satisfy the authorities under the Wealth-tax Act that the valuation shown in the balance-sheet is not correct. But in the absence of such a proof, the Wealth-tax Officer will be justified in proceeding on the basis that the value shown in the balance-sheet is correct because no one can know the value of the assets of a business more than those who are in charge of the business. In other words, the value of the assets shown in the balance-sheet can justifiably be made the primary basis of valuation for the purpose of the Wealth-tax Act. In other words, it can be taken as prima facie evidence of the value of the assets. Here again the High Court ignoring the ratio of the decision of this court in Kesoram Industries case, as well as the other decisions of this court held that the evidence afforded by the balance-sheet cannot be considered as primary evidence or prima facie evidence of the value, of the assets of business. To say the least, the learned Chief Justice indulged in an unnecessary mental exercise forgetting the fact that the law as interperted by this court is binding on all courts and TribunalsTurning to the facts of the assessees case, the revaluation of the assets was made in 1956. That revaluation in the absence of any evidence to show that it was incorrect, undoubtedly afforded a sound basis for valuing the assessees assets. But then, when the value of those assets had to be determined on the valuation dates concerned in these cases, the Wealth-tax Officer should have deducted from the 1956 valuation the value of the depreciation of those assets after the date they were revalued. Undoubtedly, those assets were subject to wear and tear and there was no evidence to show that the market value of those assets had gone up after they were valued in 1956. Our conclusion regarding the valuation for the year 1957-58 applies with equal force as regards the valuation for 1958-59 and 1959-60. Following the decision of this court in Aluminium Corporation of India Ltd.s case, we answer the first question referred to the High Court in all these appeals in favour of the department. On this question we see no justification for the reservations made by the High Court in the judgment under appeal in Civil Appeal No. 1075 of 1971 6. Now, turning to the second question, we are of the opinion that the finding of the Tribunal on that question was essentially a finding of fact. That finding was based on relevant evidence. It is not vitiated in any manner. In our opinion, the Tribunal took a correct view of the scope of section 7(2) of the Wealth-tax Act and its approach to the question was in accordance with law. Hence, our answer to the second question is in the affirmative and in favour of the assessee.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]Now turning to the second question referred to the High Court, we agree with the High Court that the valuation of the assets shown in the balance-sheet is not conclusive. Wealth-tax is levied on the value of the assets of the assessee on the valuation date. Section 7(2) of the Wealth-tax Act merely requires the Wealth-tax Officer to have regard to the balance-sheet. It is open to the assessee to satisfy the authorities under the Wealth-tax Act that the valuation shown in the balance-sheet is not correct. But in the absence of such a proof, the Wealth-tax Officer will be justified in proceeding on the basis that the value shown in the balance-sheet is correct because no one can know the value of the assets of a business more than those who are in charge of the business. In other words, the value of the assets shown in the balance-sheet can justifiably be made the primary basis of valuation for the purpose of the Wealth-tax Act. In other words, it can be taken as prima facie evidence of the value of the assets. Here again the High Court ignoring the ratio of the decision of this court in Kesoram Industries case, as well as the other decisions of this court held that the evidence afforded by the balance-sheet cannot be considered as primary evidence or prima facie evidence of the value, of the assets of business. To say the least, the learned Chief Justice indulged in an unnecessary mental exercise forgetting the fact that the law as interperted by this court is binding on all courts and TribunalsTurning to the facts of the assessees case, the revaluation of the assets was made in 1956. That revaluation in the absence of any evidence to show that it was incorrect, undoubtedly afforded a sound basis for valuing the assessees assets. But then, when the value of those assets had to be determined on the valuation dates concerned in these cases, the Wealth-tax Officer should have deducted from the 1956 valuation the value of the depreciation of those assets after the date they were revalued. Undoubtedly, those assets were subject to wear and tear and there was no evidence to show that the market value of those assets had gone up after they were valued in 1956. Our conclusion regarding the valuation for the year 1957-58 applies with equal force as regards the valuation for 1958-59 and 1959-60. Following the decision of this court in Aluminium Corporation of India Ltd.s case, we answer the first question referred to the High Court in all these appeals in favour of the department. On this question we see no justification for the reservations made by the High Court in the judgment under appeal in Civil Appeal No. 1075 of 1971Now, turning to the second question, we are of the opinion that the finding of the Tribunal on that question was essentially a finding of fact. That finding was based on relevant evidence. It is not vitiated in any manner. In our opinion, the Tribunal took a correct view of the scope of section 7(2) of the Wealth-tax Act and its approach to the question was in accordance with law. Hence, our answer to the second question is in the affirmative and in favour of the assesseeThe assessee has not appealed against the decision of the High Court on the first questionBefore adverting to the merits of the contentions of the parties, we consider it necessary to observe that we are wholly unable to comprehend the attitude of the High Court while dealing with the caseThe High Court quite clearly exceeded its jurisdiction in examining the competence of this court to remand an appeal brought to this court under the provisions of thex Act. It would have done well to remind itself that it was bound by the orders of this court and could not entertain or express any argument or views challenging their correctness. The judicial tradition and propriety required that court not to attempt to sit on judgment over the decisions and orders of this court