Rule 1D - Market value of unquoted equity shares of companies other than investment companies and managing agency companies - Wealth Tax Rules, 1957

Market value of unquoted equity shares of companies other than investment companies and managing agency companies. 1 1D. [Omitted by the Wealth-tax (Second Amendment) Rules, 1989, w.e.f. 1-4-1989.] ---------------------- Notes:- 1. Before omission rule 1D it was read as under : The market value of an unquoted equity share of any company, other than an investment company or a managing agency company, shall be determined as follows : The value of all the liabilities as shown in the balance sheet of such company shall be deducted from the value of all its assets shown in that balance sheet. The net amount so arrived at shall be divided by the total amount of its paid-up equity share capital as shown in the balance-sheet. The resultant amount multiplied by the paid-up value of each equity share shall be the break-up value of each unquoted equity share. The market value of each such share shall be 80 per cent of the break-up value so determined : Provided that where, in respect of any equity share, no dividend has been paid by such company continuously for not less than three accounting years ending on the valuation date, or in a case where the accounting year of that company does not end on the valuation date, for not less than three continuous accounting years ending on a date immediately before the valuation date the market value of such share shall be as indicated in the Table below : THE TABLE Number of accounting years ending on the valuation date or in a case where the accounting year does not end on the valuation date, the number of accounting years ending on a date, immediately preceding the valuation date, for which no dividend has been paid Market Value 1 2 Three years Four years Five years Six years and above 82 per cent of the break-up value of such share 80 -do- 77 -do- 75 -do- Explanation I. For the purposes of this rule, balance sheet , in relation to any company, means the balance sheet of such company as drawn up on the valuation date and where there is no such balance sheet, the balance sheet drawn up on a date immediately preceding the valuation date and in the absence of both, the balance sheet drawn up on a date immediately after the valuation date. Explanation II. For the purposes of this rule (i) the following amounts shown as assets in the balance sheet shall not be treated as assets, namely : (a) any amount paid as advance tax under section 18A of the Indian Income-tax Act, 1922 (11 of 1922), or under section 210 of the Income-tax Act, 1961 (43 of 1961); (b) any amount shown in the balance sheet including the debit balance of the profit and loss account or the profit and loss appropriation account which does not represent the value of any asset ; (ii) the following amounts shown as liabilities in the balance sheet shall not be treated as liabilities, namely : (a) the paid-up capital in respect of equity shares ; (b) the amount set apart for payment of dividends on preference shares and equity shares where such dividends have not been declared before the valuation date at a general body meeting of the company ; (c) reserves, by whatever name called, other than those set apart towards depreciation ; (d) credit balance of the profit and loss account ; (e) any amount representing provision for taxation [other than the amount referred to in clause (i)(a)] to the extent of the excess over the tax payable with reference to the book profits in accordance with the law applicable thereto ; (f) any amount representing contingent liabilities other than arrears of dividends payable in respect of cumulative preference shares.