TaxTMI 
TaxTMI 
1994 (12) TMI 43
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.... quoted equity shares of Messrs. Hico Products P. Ltd., under rule 1D of the Wealth-tax Rules, 1957, the difference in depreciation of Rs. 44,93,329 should be deducted from the value of assets shown in the balance-sheet ? " The assessee is an individual. The assessment year is 1979-80. The relevant valuation date was March 31, 1979. On the relevant valuation date, the assessee held certain shares in Messrs. Hico Products Pvt. Ltd. The assessee as well as the Wealth-tax Officer determined the value in accordance with the provisions of rule 1D of the Wealth-tax Rules, 1957. The valuation made by the assessee was as follows : Rs. " Total assets as per balance-sheet as at 31-12-1978 9,95,08,401 Less : Advance payment of tax 2,09,92,....
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....1D of the Wealth-tax Rules, 1957, did not permit deduction of the difference in depreciation of Rs. 44,93,329. According to the Revenue, the balance sheet figures alone had to be taken into consideration and no deduction therefrom on account of the supposed difference in depreciation was permissible. This contention of the Revenue did not find favour with the Tribunal. The Tribunal observed that there was a note in the annexure which formed part of the profit and loss account for the year ended December 31, 1978, as under : " 2. The method of providing depreciation on plant and machinery and plant for scientific research was changed from the year 1969 from the income-tax basis to the straight line basis, contemplated under section 205(2)....
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....ed from the value of assets in computing the value of the shares under rule 1D of the Wealth-tax Rules, 1957. Hence, this reference at the instance of the assessee. Mr. G. S. Jetley, learned counsel for the Revenue, submits that under rule 1D of the Wealth-tax Rules, the value of the assets as shown in the balance-sheet of the company has to be taken. It is not open to make any deduction from such value. The submission of learned counsel for the assessee, Mr. Arun Sathe, on the other hand, is that the value shown in the balance-sheet would mean not only the value shown but also the value that could have been shown if the assessee had claimed depreciation on a different basis than the one adopted by it. In that view of the matter, accordi....
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....ce-sheet', in relation to any company, means the balance-sheet of such company as drawn up on the valuation date and where there is no such balance-sheet, the balance-sheet drawn up on a date immediately preceding the valuation date and in the absence of both, the balance-sheet drawn up on a date immediately after the valuation date. Explanation II.-For the purposes of this rule,-- (i) the following amounts shown as assets in the balance-sheet shall not be treated as assets, namely : (a) any amount paid as advance tax under section 18A of the Indian Income-tax Act, 1922 (11 of 1922), or under section 210 of the Income-tax Act, 1961(43 of 1961) ; (b) any amount shown in the balance-sheet including the debit balance of the profit ....
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.... to the assessee, it could have claimed as extra deduction on account of depreciation from 1969 till the year of assessment. In other words, the assessee wants the Wealth-tax Officer to take the value of the assets of the company not at the figure shown in the balance-sheet but a figure different from that a figure which would have appeared in the balance-sheet had the depreciation been claimed by it at a figure which it could have claimed. This claim of the assessee, in our opinion, is not tenable on the face of the clear language of rule 1D which requires the Wealth-tax Officer to take the value of all the assets " shown in the balance-sheet ". We are supported in our above conclusion by the recent decision of the Supreme Court in Bhar....
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.... loss account is not shown as a liability in the balance-sheet. It cannot, therefore, be deducted from the value of the assets shown in the balance-sheet. We have also considered the submission of counsel for the assessee that the note in the annexure to the profit and loss account should be treated as a part of the profit and loss account in the balance-sheet. We, however, fail to understand how this submission can help the assessee in this case. The note merely points out the method followed by the assessee-company for providing depreciation and indicates the additional amount that could have been claimed as depreciation in the year under consideration if a different method of depreciation had been followed and the amount that could ha....