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2000 (11) TMI 76 - HC - Wealth-taxWealth Tax, Valuation Of Assets, Unquoted Equity Shares, Net Wealth, Compulsory Deposit Scheme
Issues:
1. Valuation of unquoted equity shares for Wealth-tax Rules, 1957 2. Inclusion of compulsory deposit amount in taxable wealth Valuation of unquoted equity shares for Wealth-tax Rules, 1957: The case involved a Hindu undivided family holding unquoted shares in companies. The dispute arose regarding the reduction of provision for taxation by the amount of advance tax payable under section 210 of the Income-tax Act, 1961, while valuing the unquoted equity shares for the purpose of rule ID of the Wealth-tax Rules, 1957. The Inspecting Assistant Commissioner rejected the contention of the assessee, but the Commissioner of Wealth-tax (Appeals) ruled in favor of the assessee. On appeal, the Income-tax Appellate Tribunal held that the provision for taxation should not be reduced by the advance tax paid by the company when computing the value of unquoted shares. The court referred to the case of Bharat Hari Singhania v. CWT, emphasizing the validity and applicability of rule ID for valuing unquoted equity shares. It was held that the rule must be followed in all cases, and as no alternative method was prescribed, the provision for taxation should not be reduced by the advance tax paid. The reference was answered against the assessee and in favor of the Revenue. Inclusion of compulsory deposit amount in taxable wealth: The second issue pertained to whether the amount in the compulsory deposit scheme account should be included in the taxable wealth of the assessee. Citing the case of V. M. Rao v. CWT, which established that the amount in the compulsory deposit account qualifies as an 'asset' under the Wealth-tax Act, the court determined that the amount standing to the credit of the assessee in the compulsory deposit scheme account falls within the definition of 'property' under the Act. Therefore, the amount in the compulsory deposit account should be treated as an asset and included in the taxable wealth of the assessee. The reference was answered against the assessee and in favor of the Revenue.
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