JUDGMENT P.K. Tare, C.J. In this reference under section 27(1) of the Wealth Tax Act, 1957, the Income-tax Appellate Tribunal, Bombay, Bench A, has referred the following two questions for the opinion of this Court: 1. Whether on the facts and in the circumstances of the case, for the purpose of determining the net value of the assets of the Company's business as a whole, the fixed assets had to be taken at the value adopted in the Company's balance sheet as on 31-12-1956 or adjustments could be made in the valuation of these fixed assets shown in balance sheet for allowance of normal depreciation on account of wear and tear not provided for in the earlier years? Whether on the facts and in the circumstances of the case, the amount of Rs. 16,45,164 being the tax liability for the earlier years which was disputed by the assessee in appeal, was deductible? The present reference arises on the following facts: The petitioner's liability for wealth tax relating to the assessment year 1957-58 was in question. The petitioner is a limited liability Company and at present is a sick Mill taken over by the Government for administration. In the balance sheet ending 31-12-1956, the value of the fixed assets of the Company were shown at Rs. 27,12,421. It was also not disputed that in the relevant year depreciation had not been shown in the balance sheet. In the assessment proceedings the petitioner Company claimed deduction of the depreciation amount and after such deduction, the liability of the petitioner Company would be Rs. 18,30,660. However, the contentions raised on behalf of the petitioner Company were negative by the Wealth Tax Officer as also by the Appellate Assistant Commissioner of Wealth Tax and the Income-Tax Appellate Tribunal, Bombay. Subsequently, at the instance of the assessee, the learned Members of the Appellate Tribunal referred the two questions for our opinion. Once these facts are found that the balance sheet value was taken by the Taxing Authorities as the market value for the relevant year, there can be no doubt that depreciation has to be allowed under section 7(2)(a) of the Wealth Tax Act, 1957. It is another matter that the balance sheet value would not be conclusive, but might be taken to be a prima facie correct value on which assessment could be made. It is another matter that the balance sheet value would not be conclusive, but might be taken to be a prima facie correct value on which assessment could be made. Under such circumstances, it is open to the assessee to show that the said value does not represent the correct market value and the burden to establish the correct market value would be on the assessee. On the other hand if it be the contention of the Taxing Authorities that the balance sheet value had been deflated and the correct market value is much higher, it is open to them to establish that fact by some material and the burden undoubtedly will be on the Taxing Authorities to establish that fact. It is open to the Taxing Authorities to come to a conclusion as regards the correct market value and there can be departure from the balance sheet value in some types of cases. But it can also not be denied that where the Taxing Authority takes the balance sheet value as the correct market value, the deduction for depreciation cannot be denied on the reasoning adopted by the learned Members of the Tribunal. Presently we propose to examine that reasoning. The learned Members of the Tribunal observed that it was the department's contention that the value of the Company assets as shown in the Insurance Policy was much higher, namely, above Rs. 7,00,000. It was urged on behalf of the department that even though that may not be taken to be the market value, yet, in no case, should the assessee be allowed to go below the balance sheet value. As such, it was suggested on behalf of the department that the depreciation which is allowable under section 7(2)(a) of the Act should not be allowed on a surmise or conjecture that the value as shown by the assessee might not be the real value. We may observe that no conclusion can be based on the strength of surmises or conjectures. It is for the Taxing Authority to come to a positive decision as to the market value of the fixed assets as required by section 7(2)(a) of the Wealth Tax Act, 1957, and once that value is arrived at, then by no stretch of imagination, can deduction for the depreciation be denied on untenable or unwarranted conjectures or surmises. It is for the Taxing Authority to come to a positive decision as to the market value of the fixed assets as required by section 7(2)(a) of the Wealth Tax Act, 1957, and once that value is arrived at, then by no stretch of imagination, can deduction for the depreciation be denied on untenable or unwarranted conjectures or surmises. We may observe that allowing of depreciation is a mandatory provision and it has nothing to do with the method of arriving at the correct market value. That process is altogether different. The learned counsel for the petitioner invited attention to a Division Bench decision of this Court in Commissioner of Wealth Tax, M. P. v. Swadeshi Cotton And Flour Mills Ltd. 1968 M P L J 503 : (1968) 69 I T R 539. In this connection we might usefully reproduce the observations of the Division Bench at page 543 of the report as follows: Having heard the counsel, we are clearly of the opinion that the reference should be answered in favour of the assessee. In view of the recent pronouncement of their Lordships of the Supreme Court in Kesoram Industries and Cotton Mills Ltd. v. Commissioner of Wealth Tax (1966) 59 I T R 767, 772 (S C), it can no longer be contended that, when a global valuation is made under section 7(2)(a) of the Act, the valuation as given in the balance-sheet is conclusive of the matter. On the contrary, the Wealth Tax Officer is bound to consider on the material placed before him whether the figure shown in the balance-sheet was inflated for acceptable reasons in ascertaining the true value of the assets. Their Lordships, in that case, have stated: It was open to the assessee to convince the authorities that the said figure was inflated for acceptable reasons, but it did not make any such attempt. It was also open to the Wealth Tax Officer to reject the figure given by the assessee and to substitute in its place another figure, if he was, for sufficient reasons, satisfied that the figure given by the assessee, was wrong. It follows, as a necessary corollary, that section 7(2)(a) gives the Wealth Tax Authorities the power to adopt the balance-sheet value of the assets as the net value of the business as a whole, but this valuation is not sacrosanct. It follows, as a necessary corollary, that section 7(2)(a) gives the Wealth Tax Authorities the power to adopt the balance-sheet value of the assets as the net value of the business as a whole, but this valuation is not sacrosanct. They are at liberty to make adjustments therein if, in their opinion the balance-sheet value does not represent the real or the correct value of the assets. That is a conclusion which logically flows from the very language of the section itself. We might observe that the view as expressed by the Division Bench of this Court is really based on the pronouncement of their Lordships of the Supreme Court in Keshoram Industries And Cotton Mills Ltd. v. Commissioner of Wealth Tax. Thus, the balance-sheet value need not be conclusive and the correct market value can be found out by the Taxing Authorities even apart from the balance-sheet value. But on such faulty reasoning as was adopted by the learned Members of the Tribunal, we do not think that the mandatory provision of section 7(2)(a) of the Act can be given a go by so as to deny to the assessee the deduction for depreciation that he is entitled to under the Act. The learned counsel for the department, however, invited attention to the observations of their Lordships of the Supreme Court in Commissioner of Wealth Tax, West Bengal v. Tungabhadra Industries Ltd. (1970) 75 I T R 196, to the following effect: It is argued on behalf of the appellant in the present ease that the High Court was not right in holding that the principle laid down by this Court in Keshoram Industries case is not applicable. In our opinion there is justification for this argument. Under sub-section (1) of section 7 of the Act the Wealth Tax Officer is authorised to estimate for the purpose of determining the value of any assets, the price which it would fetch, if sold in the open market on the valuation date. But this rule in the case of a running business may often be inconvenient and may not yield a true estimate of the net value of the total assets of the business. But this rule in the case of a running business may often be inconvenient and may not yield a true estimate of the net value of the total assets of the business. The Legislature has, therefore, provided in sub-section (2) (a) that where the assessee is carrying on a business for which accounts are maintained by him regularly, the Wealth Tax Officer may determine the net value of the assets of the business as a whole, having regard to the balance-sheet of such business as on the valuation date and make such adjustments there in as the circumstances of the case may require. The power conferred upon the tax officer to make adjustments as the circumstances of the case may require is also for the purpose of arriving at the true value of the assets of the business. It is of course open to the assessee in any particular case to establish after producing relevant materials that the value given of the fixed assets in the balance-sheet is artificially inflated. It is also open to the assessee to establish by acceptable reasons that the written down value of any particular asset represents the proper value of the asset on the relevant valuation date. In the absence of any material produced by the assessee to demonstrate that the written down value is the real value, the Wealth Tax Officer would be justified in a normal case in taking the value given by the assessee itself to its fixed assets in its balance-sheet for the relevant year as the real value of the assets for the purposes of the wealth tax. It is a question of fact in each case as to whether the depreciation has to be taken into account in ascertaining the true value of the assets. It is a question of fact in each case as to whether the depreciation has to be taken into account in ascertaining the true value of the assets. The onus of proof is on the assessee who must produce reliable material to show that the written down value of the assets and not the balance-sheet value is the true value If, therefore, the assessee merely claims that the written down value of the assets should be adopted but fails to produce any material to show that the written down value is the true value, the Wealth Tax Officer is justified in rejecting the claim and adopting the values shown by the assessee himself in his balance-sheet as the true value of his assets In our opinion, the High Court should have based its decision on the principle of Kesoram Industries case and the question of law should be answered in the manner stated by us in this judgment. We may observe that the said pronouncements of their Lordships of the Supreme Court do not at all support the contention raised on behalf of the department or the line of reasoning adopted by the learned Members of the Tribunal on which the ultimate conclusion was arrived at. Under the circumstances, we are clearly of the opinion that the Taxing Authorities were in error in not giving deduction to the assessee for the depreciation during the assessment year 1957-58. As regards the second question, the same would now be concluded by amendment of section 2(m) of the Act, which gives a new definition of the word "net wealth". In view of the amended provision, which has been given retrospective operation right from the coming into force of the Wealth Tax Act, 1957, there is no substance in the contention raised on behalf of the petitioner that the petitioner would be entitled to a credit in respect of the tax liability for the earlier years. As a result of the discussion aforesaid, we answer the reference as follows: 1. As a result of the discussion aforesaid, we answer the reference as follows: 1. That on the facts and in the circumstances of the case, for the purpose of determining the net value of the assets of the Company's business as a whole, the fixed assets had to be taken at the value adopted in the Company's balance-sheet as on 31-12-1956 and adjustments were required to be made in the valuation of the fixed assets as shown in the balance sheet by allowing the normal depreciation on account of wear and tear not provided for in the earlier years. That on the facts and in the circumstances of the case, the amount of Rs. 16,45,164 being the tax liability for the earlier years, which was disputed by the assessee in appeal, was not deductible from the value of the assets. Let the reference be returned to the Income-tax Appellate Tribunal for passing the final order in accordance with the opinion recorded by us. In view of the divided success, we direct that there shall be no order as to costs of this reference. Petition allowed.