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TMI Blog1984 (5) TMI 129X X X X Extracts X X X X X X X X Extracts X X X X ..... and Pudukottai Corpn. Ltd. The AAC found that there were certain amounts in the balance sheet shown as provision for bad debts which were deducted from the amounts shown under the head 'Unsecured loans' as assets in the relevant balance sheets of the companies. He held that such provision for bad debts should be excluded or deducted in determining the net worth of the shares and not included as was done by the WTO. Aggrieved by his order, the department is in appeal. 2. Before we proceed to deal with the dispute, it is necessary to point out that there is a mistake in the statement of facts by the AAC, in regard to the provision for bad debts. It is only in the case of the company Rukmani Mills Ltd. that from the amount of unsecured loan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s clarification on facts, we shall now proceed to consider the objections of the department and the contentions of the assessee. 3. In the grounds, the first objection stated is that the AAC erred in directing exclusion of provision for bad debts in computing the break-up value of shares in companies failing to note that the amount in question had already been taken into consideration by the WTO. This ground is not clear to us and is evidently misconceived because while in respect of Rukmani Mills Ltd.'s shares the provision for bad debts have been directed to be deducted. In the other two companies' cases, we have already stated, what is directed to be excluded are the provisions in respect of shares or investments doubtful of realisatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of unquoted shares according to the method they found more suitable prior to the framing of the Rules, after the framing of such Rules, the method prescribed under rule 1D should be applied. The reference to Bharat Hari Singhania's case in the ground is evidently a mistake as no decision concerning this question is seen reported on that page in that volume of ITR. The learned departmental representative at the time of hearing also pointed out that the decision of the Bombay High Court in the case of Smt. Kusumben D. Mahadevia v. CWT [1980] 124 ITR 799 takes the view that the method prescribed under rule 1D for valuing unquoted shares is only directory and not mandatory. The assessee's learned representative relied on the order of the AAC. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d do not form part of the value of any assets at all (Sic). What is shown as asset in the balance sheet is the net amount after deducting the provisions for unrealisable part of the same. Liability in the ordinary sense and as contemplated in the rule, according to us, is a liability for any outstanding expenditure or other such items and does not contemplate a fall or reduction in the realisable value of any asset including loans or advances made to other persons. So, there is no question of the assessee claiming any liability which he is not entitled to. As we have already noticed, according to the strict construction of the rule, what is to be included as the value of the assets is the aggregate of the assets shown and included in the ba ..... X X X X Extracts X X X X X X X X Extracts X X X X
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