9911796707
TMI Blog1985 (12) TMI 109X X X X Extracts X X X X X X X X Extracts X X X X ..... return was filed on 9-2-1979 wherein the value of these shares were shown at Rs. 2,74,000, which value was arrived at after working out the shares as per the provisions of rule 1D of the Wealth-tax Rules, 1957 ('the Rules') which valuation gave the value per share at Rs. 274. Later a revised return was filed where the value of these shares were shown at Rs. 85,000, which was arrived at working out these shares on the basis of yield method. The WTO required the assessee as to why these shares should not be valued unquoted equity shares. The assessee stated that even if rule 1D provided for the adoption of a particular method of valuation of shares, which is commonly known as break up value method, that was not a proper method to be adopted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the assessment after making minor changes. The Commissioner, subsequently, came to the view that the assessment made by the WTO was erroneous and that the WTO should have followed the provisions of rule 1D and valued the shares on that basis. The Commissioner after overruling the objections of the assessee directed the WTO to value the shares as per the provisions of rule 1D. The assessee aggrieved filed a writ petition before the High Court challenging the order of the Commissioner submitting that the provisions of rule 1D were only directory and never mandatory. If rule 1D is held to be mandatory then that rule ultra vires the Income-tax Act, 1961 and should be struck down as that rule sought to impose a liability which was not warrant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ormer case, where the valuation date is identical, the Wealth-tax Officer will have to compute the value of the unquoted shares by applying the rule 1D. Where, however, like the present the valuation date is not the same even the Wealth-tax Officer may not be bound to take the course to the provisions of rule 1D." By laying down the law, thus, the High Court felt that the value of the shares must be arrived at on the basis of yield method. Dealing with the various other arguments the High Court held : "To summarise, the position, therefore, is that when the question arises as to the value of unquoted shares the Wealth-tax Officer has to act according to the provisions of section 7(1) read with rule 1D, if applicable. He has to determine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bound by rule 1D and the unquoted shares had to be valued according to the said rule. That decision was later followed by the same High Court in Bharat Hari Singhania v. CWT [1979] 119 ITR 258. Discussing these judgments the Delhi High Court held that the Tribunal is not bound by rule 1D and it was only the WTO that was bound by it. Thus, even if rule 1D is applied by the WTO, it is open to the Tribunal to consider its applicability and also to come to such a decision as the Tribunal thinks fit on the facts of that case. Respectfully following the judgment of the Delhi High Court, which is binding on us, we hold that the shares are to be valued not by applying the provisions of rule 1D unless the balance sheet date and the assessee's valuat ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
