Balance-sheet valuation under wealth-tax may be adjusted where depreciation or written down value shows book figures are not real value.

Section 7(2)(a) of the Wealth-tax Act values a business as a whole by reference to the balance-sheet, but the balance-sheet is not conclusive in every case. The Wealth-tax Officer may adjust book figures to reach the true value of assets, and must consider material showing that depreciation or written down value justifies departure from balance-sheet values. Depreciation allowed for income-tax purposes is a relevant factor, though not automatically decisive. If no contrary material is produced, the balance-sheet valuation may be adopted. The text therefore states that adjustment may be warranted where facts support it, rather than treating book figures as binding.

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Issues: Whether, in valuing the assets of a business on a global basis under section 7(2)(a) of the Wealth-tax Act, 1957, the Wealth-tax Officer is bound to accept the balance-sheet figures as conclusive and refuse any adjustment for the written down value of depreciable assets.

Analysis: Section 7(2)(a) requires valuation of the business as a whole having regard to the balance-sheet, but it does not make the balance-sheet conclusive in every case. The power to make adjustments is intended to enable the Wealth-tax Officer to arrive at the true value of the assets, and where proper materials are placed before him showing circumstances that justify departure from the book figures, he must consider such material and make appropriate adjustments. Depreciation allowed for income-tax purposes may be one relevant factor in that enquiry, though it is not automatically decisive. If no material is produced to show that the balance-sheet does not reflect the real value, the valuation shown there may be adopted.

Conclusion: The balance-sheet is not invariably conclusive under section 7(2)(a), and the assessee is entitled to have the officer consider whether adjustment for depreciation or written down value is warranted; the matter requires fresh consideration on that basis.

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