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Issues involved:
The judgment relates to Wealth-tax References for the assessment years 1968-69 and 1969-70 under the Wealth Tax Act. The main issue is whether the Tribunal was justified in accepting the assessee's statement on the valuation of certain unquoted shares. Valuation of Unquoted Shares: The assessee declared the value of unquoted shares based on a method involving break-up value and average value. The WTO, however, calculated the value of the shares according to rule 1D of the Wealth Tax Rules. The AAC and Tribunal accepted the assessee's valuation, citing consistency with previous years. A Division Bench precedent emphasized the mandatory nature of rule 1D for valuing unquoted equity shares. Legal Arguments: The counsel for the assessee argued for a reconsideration of the case, highlighting the freedom granted to the WTO for valuation before the rules were framed. The court rejected this argument, stating that the amendments post-rules did not alter the applicability of rule 1D. Reference to a Supreme Court case on a different matter was deemed irrelevant. The court emphasized the binding nature of rule 1D on all assessing authorities, including higher appellate bodies. Applicability of Rule 1D: The court clarified that rule 1D must be applied for determining the market value of unquoted shares post its framing. The rule is equally binding on all authorities involved in the assessment process. The court drew a parallel with provisions under the Land Acquisition Act to emphasize the universal application of valuation rules in such cases. Conclusion: In line with the binding precedent, the court ruled against the assessee, answering the referred question in the negative in favor of the department. The Commissioner of Wealth-tax was awarded costs amounting to Rs. 200. This judgment underscores the mandatory application of rule 1D for valuing unquoted shares under the Wealth Tax Act, emphasizing consistency and adherence to established rules in valuation assessments.
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