1986 (7) TMI 215 - AT - Wealth-tax

Summary

Issues: Valuation of shares held by the assessee in M/s Dalco Engineering Pvt. Ltd. and M/s Sealol Hindustan Pvt. Ltd. for the assessment years 1980-81, 1981-82, 1983-84, and 1984-85.

Analysis:
1. The appeals for the assessment years 1980-81 and 1981-82 were filed against the Commissioner's order under section 25(2) concerning the valuation of shares held by the assessee in M/s Dalco Engineering Pvt. Ltd. The Wealth-tax assessment was initially completed by the WTO accepting the net wealth figure shown in the return. However, the CWT initiated proceedings under section 25(2) as he believed the valuation of shares was erroneous. The CWT eventually determined the value of the shares using the yield method, which was challenged by the assessee.

2. The assessee argued that the valuation of shares was correctly done as per Rule 1D and principles established by the Gujarat High Court. The Department contended that fresh evidence provided by the assessee's counsel, including a valuation format and calculations by other Chartered Accountants, should not be admitted. The Department also argued that the yield method was an alternative valuation method, and if Rule 1D was not applied, the yield should have been calculated at 12% instead of 15% as done by the assessee.

3. The Tribunal observed that there was an error in the initial calculation of shares as per Rule 1D, which the CWT sought to correct through the yield method. However, the assessee's representative did not agree with the valuation done using the yield method. After considering the arguments, the Tribunal directed that the valuation of shares should be done in accordance with the principles laid down by the Punjab & Haryana High Court and the Madras High Court, under Rule 1D, leading to a modification of the CWT's order.

4. The appeals for the assessment years 1983-84 and 1984-85 were against the AAC's order confirming the valuation adopted by the WTO. The AAC upheld the valuation as the assessee had disclosed the value of shares in accordance with Rule 1D. The assessee contended that the shares should be valued using the yield method, which was rejected by the AAC.

5. The Tribunal reiterated that the valuation of shares for these years should be done under Rule 1D based on the principles established by the Punjab & Haryana High Court and the Madras High Court. Consequently, the assessment was enhanced, and the appeals for the assessment years 1980-81 and 1981-82 were partly allowed, while those for the assessment years 1983-84 and 1984-85 were dismissed.