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Issues Involved:
1. Adequate opportunity of being heard. 2. Substitution of fair market value by the value as per Rule 1D of the Wealth Tax Rules. 3. Calculation of tax liability as per the provisions of the Income Tax Act, 1961. Summary: Issue 1: Adequate Opportunity of Being Heard The appellant contended that the CIT(A) erred in passing the appellate order without giving adequate, proper, and fair opportunity of being heard. However, the appellant's counsel did not press this ground, and it was rejected due to the absence of supporting material. Issue 2: Substitution of Fair Market Value by Rule 1D of Wealth Tax Rules The appellant argued that the CIT(A) erred in confirming the Assessing Officer's action of substituting the fair market value adopted by the appellant with the value as per Rule 1D of the Wealth Tax Rules, 1957. The appellant had valued the shares of M/s. Mysore Arts & Woods Works Pvt. Ltd. based on a valuation report and claimed the benefit u/s 54EC of the IT Act, resulting in nil long-term capital gain. The Assessing Officer, however, applied Rule 1D of the Wealth Tax Rules, which was mandatory for unquoted equity shares, and valued the shares at Rs. (-) 33.62 per share. The CIT(A) upheld this valuation, considering it more scientific and in line with the jurisdictional ITAT's decisions. The Tribunal found that Rule 1D of the Wealth Tax Rules had been omitted by the Wealth Tax (Second Amendment) Rule, 1989, w.e.f. 1.4.1989, and Schedule-III of the Wealth Tax Act had been omitted by the Finance Act, 1993, w.e.f. 1.4.1993. Therefore, Rule 1D could not be applied to the assessee's case for the Assessment Year 2005-06. The Tribunal referred to the decision in Smt. Madhu Tyagi vs. DCIT (2008) 19 SOT 612 (Del.), which held that the fair market value should be determined as per the relevant provisions of the Income Tax Act, not by an artificial value as per rules that had no application. Issue 3: Calculation of Tax Liability The appellant contended that the CIT(A) erred in not calculating the tax liability in a proper manner as per the provisions of the Income Tax Act, 1961. The Tribunal noted that the Assessing Officer had not considered the net worth certificate and the valuation report provided by the appellant. Therefore, the Tribunal set aside the orders passed by the revenue authorities and remanded the matter back to the Assessing Officer for fresh consideration in light of the Tribunal's observations and according to law, after providing a reasonable opportunity of being heard to the assessee. Conclusion: The Tribunal partly allowed the appeal for statistical purposes, directing the Assessing Officer to re-evaluate the fair market value of the shares as on 1.4.1981 according to the relevant provisions of the Income Tax Act and not as per Rule 1D of the Wealth Tax Rules, which was no longer applicable.
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