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Issues:
1. Valuation of shares of M/s Eicher Goodearth Ltd. for wealth-tax assessment. 2. Deduction of liability for proposed dividend. 3. Treatment of advance tax paid in valuation of equity shares. 4. Dispute over valuation of equity shares of Goodearth Engines Pvt. Ltd. 5. Consideration of contingent liability for arrears of dividend on cumulative preference shares. Issue 1: Valuation of shares of M/s Eicher Goodearth Ltd.: The appeal concerns the wealth-tax assessment for the assessment year 1979-80, specifically focusing on the valuation of shares of M/s Eicher Goodearth Ltd. not quoted on the stock exchange. The contention revolves around the liability of Rs. 5,75,196 for proposed dividend and its deduction from the company's assets for share valuation. The Tribunal rejected the argument, emphasizing that as the dividend declaration occurred after the valuation date, no legal liability existed on the valuation date, as approval in a general meeting is required for such liability. Issue 2: Treatment of advance tax in valuation of equity shares: Grounds 3 & 4 challenge the exclusion of advance tax paid by the company from the provision for income tax when valuing equity shares. The Tribunal referred to conflicting judgments but adopted a view favorable to the assessee. Citing precedents and the Gujarat High Court judgment, the Tribunal held that advance tax paid should not be deducted from the tax payable to determine the excess provision for taxation under r. 1D. Issue 3: Dispute over valuation of equity shares of Goodearth Engines Pvt. Ltd.: The appeal contested the valuation of equity shares of Goodearth Engines Pvt. Ltd., with the appellant arguing for a lower value compared to the valuation by the WTO. The contention was based on the exclusion of a provision for taxation from the valuation. The CWT(A) upheld the WTO's valuation, noting the absence of a satisfactory explanation or breakdown from the appellant. The Tribunal found no infirmity in the CWT(A)'s approach and rejected the ground. Issue 4: Consideration of contingent liability for arrears of dividend on cumulative preference shares: A new point raised was the alleged liability of Rs. 1,71,000 for arrears of dividend on cumulative preference shares in the valuation of equity shares of Goodearth Engines Pvt. Ltd. The Tribunal dismissed this contention, highlighting that no dividend had been declared, and cumulative preference shares do not create a liability until profits are earned and dividends are declared. The absence of a legal liability for such dividends led to the rejection of this argument. In conclusion, the Tribunal partly allowed the appeal, directing the WTO to recompute the value of shares of Eicher Goodearth Ltd. based on the findings and observations outlined in the judgment.
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