Wealth-tax valuation of shares and compulsory deposits: full credited amounts treated as assets, with no discounting allowed.

In valuing shares for wealth-tax purposes, advance tax paid by a company was not to be deducted again from the assets side where full provision for taxation had already been allowed as a liability; the Supreme Court-based approach was followed, and the issue was answered against the assessee. Amounts credited under the compulsory deposit scheme were also not to be discounted for wealth-tax valuation: because the governing scheme required repayment of the full deposit with interest in instalments, the entire credited amount was treated as a repayable asset, and discounting was held unwarranted.

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Issues: (i) Whether, in valuing shares, advance tax paid by the company was to be deducted from the assets side while full provision for taxation was deducted as a liability; (ii) Whether the amount credited under the compulsory deposit scheme was liable to be discounted for inclusion in the assessee's wealth.

Issue (i): Whether, in valuing shares, advance tax paid by the company was to be deducted from the assets side while full provision for taxation was deducted as a liability.

Analysis: The issue was treated as covered by the Supreme Court decision relied upon by the Revenue, and the same approach was followed.

Conclusion: The question was answered in the negative, in favour of the Revenue.

Issue (ii): Whether the amount credited under the compulsory deposit scheme was liable to be discounted for inclusion in the assessee's wealth.

Analysis: The compulsory deposit legislation required repayment of the deposit, together with interest, in five equal annual instalments after the specified period, with provision for earlier repayment in cases of hardship. On that basis, the whole amount standing to the assessee's credit was treated as repayable and therefore as an asset within the meaning of the wealth-tax law; discounting was held unwarranted.

Conclusion: The question was answered in the negative, in favour of the Revenue.

Final Conclusion: Both referred questions were decided against the assessee and the reference was answered for the Revenue.

Ratio Decidendi: Where a statutory deposit is repayable in full, with interest, according to the governing scheme, its entire credited amount constitutes an asset for wealth-tax valuation and is not to be discounted merely because repayment is deferred.

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