1981 (10) TMI 47 - AT - Income Tax

Summary

Issues:
1. Confirmation of the value of shares of a company.
2. Confirmation of the value of life interest as per Wealth-tax Rules.

Confirmation of the value of shares:
The appeals in question dealt with the confirmation of the value of shares of a company by the Commissioner (Appeals). The appellant argued that the value, as per rule 1D of the Wealth-tax Rules, should be lower than what was adopted by the WTO and confirmed by the Commissioner (Appeals). However, it was noted that the Commissioner had proceeded under section 264 of the Income-tax Act, rendering the ground infructuous and leading to its dismissal. The counsel for the appellant contended that the rules are not mandatory, citing the decision of the Bombay High Court in a similar case. On the other hand, the departmental representative argued that the rules are binding on all authorities under the relevant Act, including the Tribunal. The Tribunal analyzed the nature of rule 1D, referring to the interpretations by the Bombay High Court and the Allahabad High Court in relevant cases. Ultimately, the Tribunal held that once the rules are made, they are binding on all authorities, including the Tribunal, in line with the view of the Allahabad High Court. The decision of the Commissioner (Appeals) was confirmed, and the appeals were dismissed.

Confirmation of the value of life interest:
Regarding the value of the life interest of the assessee, the Commissioner (Appeals) confirmed the value as determined by the WTO following rule 1B of the Wealth-tax Rules. The appellant had submitted an actuarial report, which was not accepted. Arguments were presented by both sides on the mandatory or directory nature of rule 1B. The Tribunal examined the interpretations of relevant sections and rules by the Bombay High Court and the Allahabad High Court in different cases. The Tribunal concluded that the rules are binding on all authorities under the Act, including the Tribunal. The Tribunal referred to the importance of providing a definite method of valuation through the rules to ensure certainty and prevent discrimination between assessees. Consequently, the decision of the Commissioner (Appeals) was upheld, and the appeals were dismissed.

In conclusion, the Tribunal's decision emphasized the binding nature of the Wealth-tax Rules on all authorities, including the Tribunal, in determining the value of shares and life interest. The interpretations of relevant sections and rules by different High Courts were considered to establish the mandatory application of the rules. The appeals were dismissed based on the confirmation of the decisions of the Commissioner (Appeals) in both aspects.