9911796707
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Issues:
- Interpretation of rule 2B(2) of the Wealth-tax Rules, 1957 for determining the market value of closing stock. - Application of export invoice value and gross profit rate in valuation. - Burden of proof on Revenue to show market value exceeds by more than 20%. - Tribunal's authority in determining market value for wealth-tax assessment. Analysis: The judgment addresses multiple reference applications under section 27(3) of the Wealth-tax Act, 1957, all raising common questions related to the interpretation and application of rule 2B(2) of the Wealth-tax Rules, 1957. The central issue revolves around determining the market value of the closing stock for wealth-tax assessment. The Revenue contended that the export invoice value should be reduced by 35% to ascertain the actual market value, while the assessees argued against this approach. In the case of Reference Application No. 108 of 1988 and similar references, the questions raised pertained to the justification of reducing the export invoice value by 35% to determine the market value of the closing stock. The Tribunal's decision was upheld by the High Court, emphasizing that the export invoice value cannot be the sole basis for valuation, especially if the goods did not fetch that value in foreign markets. The court supported the Tribunal's approach of deducting 35% to arrive at a fair market value, which was found to be less than 20% of the cost price, thus ruling out additional wealth tax under rule 2B(2). Moreover, the judgment highlighted the burden of proof on the Revenue to establish that the market value exceeds the disclosed value by more than 20%. The court cited precedents where it was held that the Revenue must provide concrete evidence to justify invoking rule 2B(2) for valuation adjustments. In the absence of such proof, the Tribunal's decision to reject the Revenue's claims and delete the additions made by the Wealth-tax Officer was deemed justified. Ultimately, the High Court ruled in favor of the assessees in all the references, affirming the Tribunal's decisions regarding the valuation of closing stock for wealth-tax purposes. The court upheld the Tribunal's authority in estimating the fair market value based on factual considerations and dismissed the Revenue's contentions. The judgment underscored the importance of substantiated valuation methods and the Revenue's onus to prove valuation discrepancies to invoke rule 2B(2) effectively.
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