9911796707
TMI Blog1984 (9) TMI 114X X X X Extracts X X X X X X X X Extracts X X X X ..... (1980) 14 CTR (SC) 366 : (1980) 122 ITR 38 (SC) and of the Bombay High Court of the same appellant wherein it was held that in similar circumstances as the appellant's case, the valuation of the shares should be determined not on the basis of the break-up value following r. 1D but the basis of yield or profit earning method should be adopted. In the case on hand the appellant had given detailed calculation for the year ended31st Dec., 1974arriving at the valuation per share at Rs. 114.37. The proposition of the WTO that r. 1D rules out in the case of valuation of the shares of the company all methods of computation of the value of the share and restricts the scope of enquiry under s. 7(1) only to value on break-up method is incorrect as is amply clear form the various decisions discussed above and r. 1D has been held to be directory and not mandatory. It was also not correct for the WTO to have brushed aside the contentions of the appellant that notes appended to the balance sheet regarding the under provision of depreciation on the cylinders amounting to Rs. 47.47 lakhs formed on integral part of the balance sheet and that the amount of under provision for depreciation has to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O (1981) 12 TTJ (Del) 25 : (1981) 1 SOT 623 (Del) (SB) for the proposition that the rules were mandatory in the matter of valuation of assets. 4. On the other hand, Shri Devan P. N. Chopra ld. counsel of the assessee vehemently supported the order of the AAC. According to him the decision of the AAC is fully supported by the decision of Hon'ble Supreme Court in the case of CWT vs. Mahadev Jalan & Ors. 1972 CTR (SC) 257 : (1972) 86 ITR 621 (SC) reiterated in CGT vs. Smt. Kusumben D. According the ld. counsel although the Supreme Court in the aforesaid cases was considering the case of an investment company to which r. 1D did not apply, their observation regarding proper method of valuation relate to shares of a private limited company irrespective of whether it was an investment company or not. it is the contention of the ld. counsel of the assessee appearing before us that the decision of the Bombay High Court in the case of Smt. Kusmben D. Mahadevia vs. CWT is on all fours with the case of the assessee. According to him the cases relied upon by the ld. Departmental Representative were not exactly applicable. In that the issues raised before the Hon'ble High Court were finally dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal Representative. In that case their Lordships held r. 1C&D to be rule of procedure or evidence on the basis of the following analysis; "In deciding whether such rules are rules if evidence or procedure or rules of substantive law, assistance can be derived from the following observations of the Supreme Court in Izhar Ahmad Khan vs. Union of India AIR 1962 SC 1952: "In deciding the question as to whether a rule about irrefutable presumption is a rule of evidence or not, is seems to us that the proper approach to adopt would be to consider whether fact A from the proof of which a presumption is required to be drawn about the existence of fact B, is inherently relevant in the matter of proving fact B and has inherently and probative or persuasive value in that behalf or not. In fact A is inherently relevant in proving the existence of fact B and to any rational mind it would bear a probative or persuasive value in the matter of proving the existence of fact, B, then a rule prescribing either a reputable presumption or an irrefutable presumption in that behalf would be a rule of evidence. On the other hand, if fact A is inherently to relevant in proving the existence of fact B or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... luation is the real market value? 7. The purchaser of shares in a company which is a going concern does not usually purchase them with a view to attempt to wind up the company and to take over the same. A prudent purchaser of shares, therefore, while taking to see that his purchase many is secured by tangible assets would look mainly to the dividends which he could reasonably expect too receive, such dividend as were appropriate to the nature of the business. The normal purpose of the purchase is to provide for the annuity, a yearly income from the outlay, some sort of return commensurate with the price paid for, In spite of the uncertainties, vicissitudes and fluctuations, the purchaser all the same expect income which will tend to increase from year to year than decrease. The Hon'ble Supreme Court in the case of CWT vs. Mahadev Jalan set out the various aspects to be considered while valuing the shares of a company. The said decision was quoted liberally by the Hon'ble Bombay High Court in the case of Smt. Kusumben D. Mahadevia, and reproduced by the CIT (A) in his order extensively. After setting out those conditions the Hon'ble Supreme Court observed as follows: "In setting o ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
