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Issues: Valuation of shares using break-up method vs. yield method, Inclusion of shares in net wealth based on ownership dispute
In this case, the assessee originally declared a net wealth including shares inherited from the late father. The Wealth Tax Officer (WTO) valued the shares using the break-up method under rule 1D, resulting in a higher valuation than the revised return. The assessee contended that the break-up method was not suitable for a running concern like Atul Glass Industries and argued for the yield method. The Appellate Assistant Commissioner (AAC) agreed that the break-up method was not applicable but upheld the valuation at Rs. 226.29 per share based on the Assistant Controller's order. The assessee and the department appealed against this decision, with the department arguing for the break-up value of Rs. 330 per share under rule 1D. The ITAT Delhi-E held that after the introduction of rule 1D, valuation of unquoted shares must be done according to this rule, as per the decision of the Allahabad High Court. The Special Bench of the Appellate Tribunal also confirmed the mandatory nature of rule 1D. The ITAT concluded that the AAC was not justified in rejecting the break-up method for valuing the shares of Atul Glass Industries, as it was a running business. The ITAT allowed the department's appeal and rejected the assessee's appeal on this issue, reversing the AAC's order. Regarding the ownership dispute over 780 shares held by Smt. Shant Duggal, the ITAT referred to a District Judge's decision confirming her entitlement to the shares through a will and probate. Citing a Calcutta High Court decision, the ITAT held that tax authorities cannot question the genuineness of a will once probate is granted. Therefore, the value of the 780 shares held by Smt. Shant Duggal was directed to be excluded from the net wealth of the assessee. The ITAT partly allowed the assessee's appeal and allowed the department's appeal. In conclusion, the ITAT upheld the valuation of shares using the break-up method under rule 1D, rejected the inclusion of 780 shares in the net wealth based on the ownership dispute, and made decisions in favor of both the assessee and the department on different grounds.
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