1984 (7) TMI 216 - AT - Wealth-tax

Summary

Issues:
1. Valuation of shares for wealth tax assessment under Wealth Tax Act.
2. Jurisdiction of the Commissioner under section 25(2) of the Wealth Tax Act.
3. Application of rule 1D of the Wealth Tax Rules for valuation of shares.

Analysis:

Issue 1: Valuation of shares for wealth tax assessment under Wealth Tax Act:
The assessee had returned a wealth of Rs. 10,38,800, which included shares in private limited companies. The assessee valued the shares at Rs. 100 per share based on the face value. However, the Commissioner found this valuation erroneous as the market value in previous years was higher. The Commissioner held that the valuation adopted by the assessee was prejudicial to the interest of revenue. The Commissioner directed the Wealth Tax Officer to revalue the shares according to law. The Tribunal agreed with the Commissioner's decision, stating that there was no evidence that the Wealth Tax Officer had considered whether the Rs. 100 per share valuation was the actual market value. The Tribunal upheld the Commissioner's decision, dismissing the appeal.

Issue 2: Jurisdiction of the Commissioner under section 25(2) of the Wealth Tax Act:
The assessee contended that the Commissioner did not have valid jurisdiction under section 25(2) to direct revaluation of the shares. However, the Tribunal held that the Commissioner had valid jurisdiction as there was no evidence that the Wealth Tax Officer had properly considered the market value of the shares. The Tribunal agreed with the Commissioner's decision to set aside the assessment and directed a revaluation according to law.

Issue 3: Application of rule 1D of the Wealth Tax Rules for valuation of shares:
The assessee argued that rule 1D was not mandatory and that the Wealth Tax Officer's acceptance of the face value was not erroneous. However, the Commissioner and the Tribunal found that there was no evidence that the Wealth Tax Officer had considered the market value of the shares or the impact of restrictive clauses in the Articles of Association. The Tribunal upheld the Commissioner's decision, stating that the revaluation should be done according to law, allowing the assessee to present arguments during reassessment.

In conclusion, the Tribunal upheld the Commissioner's decision, dismissing the appeal and directing a revaluation of the shares for wealth tax assessment in accordance with the law.