1997 (9) TMI 136 - AT - Wealth-tax

Summary

Issues: Valuation of unquoted shares and bonds of a company post-amalgamation; Compliance with Departmental Circular No. 96; Referral to Valuation Officer under s. 16A(1) of the Wealth Tax Act.

In this judgment by the Appellate Tribunal ITAT AHMEDABAD-A, the case revolved around the valuation of unquoted shares and bonds of a company following its amalgamation. The assessee, an individual, had received shares and bonds in exchange for his equity shares in the amalgamated company. The assessee declared the value of these shares and bonds based on a registered valuer's report, which was submitted to the Assessing Officer (AO) during assessment proceedings. However, the AO rejected this valuation and independently assessed a higher value for the unquoted shares of the company held by the assessee.

Upon appeal, the Deputy Commissioner of Wealth Tax (CWT) held that the valuation shown by the assessee, supported by the registered valuer's report, was accurate. The CWT(A) allowed the appeal of the assessee, emphasizing the correctness of the registered valuer's valuation.

A key contention raised by the Departmental Representative was that the AO was justified in valuing the unquoted shares of the company based on the assets and liabilities shown in the balance sheet, citing a judgment of the Bombay High Court. The Departmental Representative argued that the AO's valuation should prevail over the registered valuer's report.

The assessee's counsel, on the other hand, supported the CWT(A)'s decision, highlighting a Departmental Circular and a judgment of the Punjab & Haryana High Court. The counsel argued that the AO should have referred the valuation to the Valuation Officer under s. 16A(1) of the Wealth Tax Act, as per the Departmental Circular, instead of making an independent assessment.

The Tribunal analyzed the submissions and facts, emphasizing the importance of compliance with Departmental Circular No. 96, which mandates the referral of valuation matters to the Valuation Officer in certain cases. The Tribunal held that the AO's failure to refer the valuation to the Valuation Officer was contrary to the Departmental Circular. Additionally, the Tribunal cited a judgment of the Punjab & Haryana High Court, supporting the mandatory referral to the Valuation Officer in relevant cases.

Furthermore, the Tribunal examined the valuation report of the registered valuer, noting its compliance with relevant rules of the Wealth Tax Act. The Tribunal rejected the Departmental Representative's reliance on a judgment of the Bombay High Court, stating that it was not applicable to the facts of the case.

Ultimately, the Tribunal declined to interfere with the CWT(A)'s decision and upheld the valuation as declared by the assessee. The appeals were dismissed, affirming the valuation based on the registered valuer's report and emphasizing the necessity of compliance with Departmental Circulars and statutory provisions regarding valuation procedures.