1997 (9) TMI 137 - AT - Wealth-tax

Summary

Issues: Valuation of unquoted shares and bonds of a company during amalgamation process; Compliance with Departmental Circular No. 96 regarding valuation process; Reference to Valuation Officer under section 16A(1) of the Wealth Tax Act.

In this case, the assessee, an individual, held equity shares of a company that was amalgamated with another company. The assessee was entitled to receive shares and bonds as per the amalgamation scheme approved by the court. 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 the valuation and enhanced the value of the unquoted shares 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 correct. The Departmental Representative argued that the AO was justified in valuing the shares differently based on a judgment of the Bombay High Court regarding the valuation of unquoted equity shares. The counsel for the assessee contended that the AO's approach was contrary to Departmental Circular No. 96 and cited a judgment of the Punjab & Haryana High Court in support.

The Tribunal considered the submissions and found that the AO did not follow the Departmental Circular by not referring the valuation to the Valuation Officer as required under section 16A(1). The Tribunal held that the value declared by the assessee, in line with the registered valuer's report, should have been accepted. The Tribunal referenced a judgment of the Punjab & Haryana High Court, emphasizing the mandatory referral to the Valuation Officer in such cases. Additionally, the Tribunal noted that the valuation report complied with the relevant rules of the Wealth Tax Act and had retrospective application based on a Supreme Court decision.

Ultimately, the Tribunal declined to interfere with the Deputy CWT(A)'s finding and upheld the decision in favor of the assessee. The appeals were dismissed, affirming the valuation based on the registered valuer's report and highlighting the importance of compliance with Departmental Circulars and statutory provisions regarding valuation processes.