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Issues involved:
The judgment deals with the valuation method of unquoted shares for wealth-tax assessment and the applicability of rule 1D of the Wealth-tax Rules, 1957. Valuation Method of Unquoted Shares: The assessee valued unquoted shares by considering the mean of their break-up value and fair price based on average yield of shares. The Income-tax Officer rejected this method, insisting on valuation as per rule 1D. The Tribunal approved the assessee's method, citing acceptance in previous years. The Tribunal's reasoning was questioned as it did not invoke section 24(6) for valuation objection. The Tribunal's power to ignore rule 1D was disputed, emphasizing its legal binding nature u/s 7(1) and the Act's principles. Concession by Revenue and Rule 1D Applicability: The assessee contended rule 1D's validity, arguing it was ultra vires the Wealth-tax Act. The Tribunal clarified that rule 1D and section 24(6) operate in different spheres. The Tribunal's decision to uphold the assessee's valuation method was challenged, asserting the binding nature of rule 1D u/s 7(1). The Tribunal's power to ignore rule 1D was debated, emphasizing its legal force and applicability to valuation. Interpretation of Legal Provisions: The Tribunal's power to determine valuation was compared to that of the Wealth-tax Officer u/s 7(1). The Tribunal's exercise of power was scrutinized, emphasizing adherence to Act's principles and rules. The Tribunal's discretion under section 24(5) was discussed, highlighting the need to consider legal provisions while making valuation decisions. The Tribunal's decision to approve the assessee's valuation method was deemed unjustified, given the binding nature of rule 1D. Conclusion: The Tribunal's approval of the assessee's valuation method for unquoted shares was deemed unjustified as it did not comply with rule 1D of the Wealth-tax Rules. The Tribunal's decision was overruled, emphasizing the legal obligations under the Act. The department was awarded costs amounting to Rs. 200.
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