D.K. Kapur, J.
(1) There are six petitions moved by the Commissioner of Wealth, tax, Delhi-1, Delhi, seeking a reference to this Court u/s 27(3) of the Wealth-lax Act 1957, which relate to the assessment years 1971-72 to 1976-77. There was a consolidated order of the Tribunal for these six assessment years in appeal and a common order disallowing an application u/s 27(1) of the Act. The question of law sought to be referred to this Court is as follows :
'WHETHERon the facts and in the circumstances of the case, the Tribunal was justified and correct in law in upholding the decision of the Appellate Assistant Commissioner that the outstanding fees on the relevant valuation date were not liable to be included in the total wealth of the assessed ?'
(2) We have heard learned counsel for the petitioner, but the respondent has not appeared in spite of proper service. The facts show that the respondent-assessed is a Chartered Accountant whose wealth-tax assessment was made for the six years under consideration. The relevant valuation dates were 31.12.70 to 31.12.75, for the six years. The W.T.O. estimated that there were some outstanding professional fees due to the assessed in each year and this amount had varied between Rs. 10,000.00 and Rs. 20,000.00. He was of the view that this amount was also to be included in the computation of the wealth of the assessed under the Act. It was the contention of the assessed that this amount could not be included as he was maintaining a cash system of accounting which was evident from the balance-sheets under consideration. But, the W.T.O. treated the amounts in question as a kind of debt. In his view these were recoverable debts and the amount was thus to be included in the wealth of the assessed.
(3) The assessed appealed to the Appellate Assistant Commissioner who allowed the appeal holding that the matter was covered by a decision of the Orissa High Court, Commissioner v. Vysyaraju : 79ITR330(Orissa) . The additions made to the wealth-tax were accordingly deleted.
(4) The Department appealed to the Tribunal, which had held that there was no material on record to establish that the fees could be treated as enforceable claims. The order of the Tribunal refusing a reference to this Court passed u/s 27(1) of the Act, was based on the conclusion that a pure finding of fact was involved, and hence, no question of law arose.
(5) We are in agreement with the Tribunal that in the particular way in which the Tribunal has dealt with this question, there is a pure finding of fact. The question whether the amounts are to be included or not to be included must first primarily depend on the nature of the claims. If the claims are not of an enforceable nature, or not shown to be so, then the question does not arise at all, and hence, the Tribunal was right in refusing the reference.
(6) Learned counsel for the petitioner contended that this question has not been answered by this Court and he further relies on a decision of the Calcutta High Court in Dipti Kumar Basu v. Commissioner : 105ITR450(Cal) , in which case the Court held, in the particular circumstances of that case, that a solicitor's outstanding bills were to be included in his wealth-tax assessment, notwithstanding the fact that he was maintaining his accounts on a cash basis. Learned counsel submits that if there is a conflict between two High Courts, a question of law certainly arises. As we have seen, the present case has to be decided on the finding of the Tribunal as being one in which a question of law does not arise.
(7) However, as the point has been argued before us also on the assumption that the question of law does arise, it may be convenient here to state why even in such a situation a reference is not called for in this case. The reason for this is that u/s 7 of the Wealth-tax Act, 1957, the value of the assets may be determined in one of two possible ways. By virtue of S. 7(1), the value of assets may be determined by the market price. However, sub-section (2) states that if the W.T.O. is dealing with an assessed who is carrying on business for which regular accounts are maintained, then the W T.O. has a choice of taking the balance-sheet into consideration on the valuation date. In the present case, W.T.O. took the balance-sheet into view. That meant that he acted u/s 7(2) of the Act. In such a case, the balance-sheet valuation has to be taken into consideration after 'making such adjustments as may be prescribed'. The wording of sub-section (2) is as follows :
(8) The two sub-sections are mutually exclusive. The W.T.O. can act under either one or the other. If he chooses to act under sub-section (2), he cannot at the same time act under sub-section (1). The assessed in question was a Chartered Accountant. So, it was open to the W.T.O. to find the market value of the business. If he acted on the accounts, he could only make adjustments permissible in law. We are unable to find any provision which allows the adjustments actually made by the W.T.O. It may also be pointed out that the wording of S. 7(2)(a) was different in the relevant period when the Orissa High Court decided Commissioner of W.T. v. Vysyaraju (1971) 7 0, I.T.R., 330. The amendment of the Section became effective in 1965. Previously the words were 'and making such adjustments therein as the circumstances of the case may require'. The words 'circumstances of the case may require' have been substituted by the words 'may be prescribed'. So, now the adjustments in dispute in that case cannot be made.
(9) In the case dealt with by the Calcutta High Court in Dipti Kumar v. Com. of W.T. : 105ITR450(Cal) , the case was also decided on the previous wording of Section 7(2). In that case the assessment year under consideration was 1964-65, which was prior to the amendment made with effect from 1st April, 1965. In our view, neither of the two decisions has now any application. For the sake of convenience, it may be mentioned that in the case before the Calcutta High Court, the outstanding bills of a solicitor were treated as recoverable debts and the adjustment was made accordingly.
(10) It has apparently not been noticed by the W.T.O. and also the App. Asstt. Comm. or the Tribunal that the Section has been amended and now the jurisdiction of the W.T.O. to make adjustments in the balance- sheet has become extremely limited so that neither decision cited before us has any application to the present case.
(11) Having dealt with both the factual and legal questions, we find that this is not a case in which any reference is required. We accordingly dismiss the same and make no order as to costs as there is no appearance for the respondent.