Market value controls wrecked-ship wealth valuation, with statutory valuations outweighing later self-serving estimates.

Wealth-tax valuation of a wrecked ship turned on market value on the relevant valuation date, meaning the price a willing buyer would pay. The statutory receiver's valuation of the vessel in its deteriorated, economically unviable condition, together with the customs authorities' limited salvage-based valuation, was preferred over the assessee's later projections and balance-sheet figures, which were treated as unreliable. The ship's value was not assessable at the higher amount adopted by the wealth-tax authorities. For the assessment year 1976-77, no value was includible because ownership had not yet passed on the valuation date; for the other years, the includible value was restricted to Rs. 3 lakhs, including the amount lying with the Administrator.

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Issues: Whether the value of the wrecked ship and the related amount lying with the Administrator were to be taken at nil, at Rs. 3 lakhs, or at the higher value adopted by the wealth-tax authorities for the relevant assessment years.

Analysis: The ship had grounded years before the first valuation date, and the sale by the United States Government to the assessee was for a nominal consideration after the wreck had deteriorated further. A statutory receiver acting under the Merchant Shipping Act had accepted a valuation report treating the wreck in its existing condition as economically unviable and effectively of nil value, while customs authorities had also adopted only a limited salvage-based value. Against this, the assessee's later projections and balance-sheet figures were treated as unreliable for wealth-tax purposes. For wealth-tax, the proper test was market value, meaning the price a willing buyer would pay on the valuation date. On that basis, the statutory valuations were given greater weight than the assessee's self-serving estimates.

Conclusion: The value of the wreck was not taxable at Rs. 30,50,000. For the assessment year 1976-77, no value could be included because the assessee had not yet acquired ownership on the relevant valuation date. For the remaining years, the value was restricted to Rs. 3 lakhs, including the amount lying with the Administrator.

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