1978 (8) TMI 113 - AT - Wealth-tax

Summary

Issues:
1. Valuation of shares for wealth-tax assessment for asst. yrs. 1972-73 and 1973-74.

Detailed Analysis:
The appeals before the Appellate Tribunal ITAT Jaipur concerned the valuation of 63,114 equity shares of Premier Cable Co. Ltd. for the assessment years 1972-73 and 1973-74. The Department disputed the valuation declared by the assessee, which was Rs. 7.50 per share for 1972-73 and Rs. 4 per share for 1973-74. The Department relied on stock exchange quotations and rejected the assessee's valuation, valuing the shares at Rs. 10.56 per share for 1972-73 and Rs. 10 per share for 1973-74 based on stock exchange prices (para 2).

The AAC, on appeal, found the Department's valuation unjustified and accepted the assessee's valuation. The AAC considered actual sale transactions near the valuation dates, valuing the shares at Rs. 7.50 per share for 1972-73 and Rs. 4 per share for 1973-74. He also referred to a similar case where the market value was determined at Rs. 4 per share. The AAC concluded that the assessee's valuation was correct (para 3).

The Department, aggrieved by the AAC's order, argued that the quoted prices on the stock exchange should be the basis for valuation, even if they were from a date prior to the valuation dates. The Department contended that actual sales relied upon by the assessee were not genuine and could not determine the market value. The Department also argued against applying Rule 1-D of the Wealth Tax Rules, 1962 (para 4).

The counsel for the assessee supported the AAC's decision, emphasizing the need to determine fair market value as of the valuation dates. The counsel argued that actual sales near the valuation dates should take precedence over quoted prices from earlier dates. The counsel also referred to legal precedents to support the argument that quoted prices should reflect true market value near the valuation date. Additionally, the counsel argued that since the shares were not regularly quoted, they should be treated as unquoted shares and valued accordingly (para 5).

The Tribunal upheld the AAC's decision, emphasizing the importance of actual sale transactions near the valuation dates in determining fair market value. The Tribunal noted that quoted prices from a date far anterior to the valuation dates may not reflect true market value. It was concluded that the assessee's valuation based on actual sales was appropriate, and the Department's appeals were dismissed (para 6).