Judgment

RAMASWAMI, J.:- This appeal is brought by certificate granted under Section 29 (1) of the Wealth Tax Act, 1957 (hereinafter referred to as the Act) against the judgment of the Calcutta High Court dated January 29, 1966 in Wealth Tax Matter No. 372 of 1961.

2. The respondent is a company which is assessed to wealth-tax for the assessment year 1957-58, 1958-59 and 1959-60. In computing the net wealth of the respondent on the respective valuation dates the Wealth Tax Officer proceeded under Section 7 (2) (a) of the Act and included the full value of the fixed assets as shown by the respondent in the respective balance-sheets without any adjustment, after rejecting its contention that the fixed assets should be assessed at their written down value as computed for the purposes of income-tax. In the assessment order for 1957-58 the Wealth Tax Officer gave his reasons as follows:

"The assessee claimed that since the full amount of depreciation which was admissible under the Income-tax Act was not provided in the balance-sheet the amount of depreciation not provided for earlier should now be deducted from the value of the assets in order to arrive at the net wealth. This contention can hardly be accepted. The depreciation allowable under the Income-tax Act does not determine the market value of the assets. The object of allowing depreciation in the income-tax assessment is quite different. For the purpose of the Wealth Tax assessment the Value of the assets as estimated by the assessee itself in its balance-sheet has been accepted."

3. Similarly in his assessment order for 1958-59 the Wealth Tax Officer stated as follows:-

"Excluding the value of land, the total value of the fixed assets as per balance-sheet amounts to Rs. 60,53,811 whereas the assessee has shown in its return the value of the same at Rs. 7,69,435. These values have been shown by the assessee on the basis of income-tax written down value and not on the basis of the balance-sheet values as required under the global system of valuation. It is common knowledge that the values of imported machinery has increased considerably during the last few years and, on the valuation date, I do not think that their value should be less than that provided for in the balance-sheet."

4. On appeal the Appellate Assistant Commissioner confirmed the valuation of the fixed assets. On further appeal the Income-tax Appellate Tribunal held that it would be fair in the circumstances of the case to adopt the written down value of the assets as value thereof for all the years under appeal. In the course of its order the Appellate Tribunal said:

"In income-tax assessment depreciation is calculated upon the original cost in a scientific and systematic manner with due regard to the nature of the asset. Therefore, the written down value as determined in the income-tax assessment may be taken as the fair index of the net value of the business assets in most cases .... it cannot however be laid down as an inflexible rule of law that in every case the written down value must be taken to be the net value of the business assets. If that were so, the Legislature would have said so in clear terms instead of indulging in the circumlocution in Section 7 (2) (a). In this particular case, it appears, the assessee, did not make any reserve for depreciation and the assets are old dating back from the inception of the business long ago. In these circumstances, in our opinion, it would be fair to adopt the written down value of the assets as the value thereof for all the years under appeal........"

At the instance of the Commissioner of Income-tax the Appellate Tribunal stated a case to the High Court under Section 27 (1) of the Act on the following question of law:

"Whether on the facts and in the circumstances of the case, for the purpose of determining the net value of the assets of the assessee under Section 7 (2) of the Wealth-tax Act, 1957 the Tribunal was right in directing that the written down value of the