Computation of Wealth of Private Limited company will be on the basis of WDV of its Assets as per
as per Income Tax Act or WDV of its Assets under Company Act as per Balance Sheet ?
Whether under construction office is exempted under Wealth Tax Act ?
Kindly advice please.
Thank you very much
Valerian D'Souza
Accounts Manager
As per Schedule III part 3,
the value of the assets as disclosed in the balance sheet shall be taken to be
1) in the case of assets on which depreciation is admissible, its wrriten down value
2) in the case of assets on which no depreciation is admiissble,its book value.
The answer to the question lies in Sch III Rule 14 of the Wealth Tax Act.
Rule 14 is applicable to companies which are carrying on businesss and are maintaining books of a/c regularly.
Step I: Determine the value of assets disclosed in the Balance Sheet as under:
(a) Depreciable assets: WDV as per IT Act
(b) Non Depreciable Assets: Book Value
(c)Closing Stock: Value adopted for IT purposes
Note: Only assets as defined in Sec 2(ea) should be taken i.e. primarily Any building and land appurtenant thereto, motor cars, jewellery, aircrafts, urban land, cash are assets for this purpose. Thus Plant & Machinery, Bank balance, factory building used for commercial purposes that are not assets as per Sec 2(ea) of WT Act are not to be taken.
Step II: Determine the Sch III value of the above assets as under:
(a) House: Rule 3 to 8
(b)Jewellery: Rule 18 & 19
(c)Any other assets: Fair Market Value (Rule 20)
Step III: If the value as per Step II exceeds the value as per Step I by more than 20% of value as per Step I, then take the value as per Step II. Otherwise take value as per Step I. The above excercise is to be carried out for each asset seperately, not by aggregating value of all assets.
Debts incurred on assets included in the net wealth are deductible. If a debt is incurred on as asset and a non asst and it is not possible to compute the debt utilized for acquiring the asset, then the following debt is deductible:
Total debt*(Actual cost of asset/Actual cost of asset and non-asset)
As regards the 2nd question, an under construction building is not an asset as per Sec 2(ea) (that defines assets for the purpose of WT Act).
wealth tax is not computed on construction office as not an assets
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