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TMI Blog1987 (4) TMI 67X X X X Extracts X X X X X X X X Extracts X X X X ..... nter alia, held shares of M/s. Batliboi Co. Pvt. Ltd. (for short 'the company'). The shares were not quoted at any stock exchange and were required to be valued in accordance with the provisions of rule ID of the Wealth-tax Rules, 1957. For the purpose of valuing the shares for the involved assessment year 1970-71, the pertinent balance-sheets of the company is that as on March 31, 1969. The assets side of the balance-sheet of the company, inter alia, disclosed an asset in the sum of Rs. 66,95,020 representing advance tax paid by the company. On the liabilities side, there appeared a liability in the sum of Rs. 1,19,17,163 representing provision for taxation. There is no dispute that for the purpose of valuing the shares of the company, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision in CIT v. Vegetable Products Ltd. [1973] 88 ITR 192 for the proposition that the expression " tax payable " meant the actual amount of tax payable, i.e., the amount payable on the basis of the book profits as reduced by the advance tax and self-assessment tax already paid and tax deducted at source. Shri Kolah, learned counsel for the assessee, on the other hand, relied on the Gujarat High Court decisions in CWT v. Ashok K. Parikh [1981] 129 ITR 46 and CWT v. Arvindbhai Chinubhai [1982] 133 ITR 800. He also referred to the Madras High Court decision in the case of T. V. Srinivasan v. CWT [1985] 152 ITR 599 in support. In order to appreciate rival contentions, it is desirable to refer to the provisions of rule ID of the Wealth-tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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." Broadly speaking, the value of the equity shares is computed by dividing the surplus of assets over the liabilitie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, 1961. The penalty under that provision is levied with reference to and for the tax payable as determined on regular assessment. The situation envisaged is, thus, post-assessment. In that context, the amount of tax, if any, payable could only mean the tax payable with reference to the assessed profits as reduced by the advance tax paid, tax paid on the basis of self-assessment and taxes deducted at source etc. The above decision has, thus, no bearing on the question posed before us. The bracketed portion in the sub-clause is to be read with the first part as (i) bracket starts immediately after the expression " provision for taxation " and (ii) the expression " to the extent of excess over " precedes the words " the tax payable ". Ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions in CWT v. Ashok K. Parikh [1981] 129 ITR 46 and CWT v. Arvindbhai Chinubhai [1982] 133 ITR 800 squarely. The Madras High Court decision in T. V. Srinivasan v. CWT [1985] 152 ITR 599 also supports this view indirectly. In the case before the Madras High Court, the assessee was an individual. He had paid sum of Rs. 11,676 as excess advance tax. This sum was treated as an asset. The entire amount of advance tax paid and not merely excess advance tax paid was held to represent the asset of the assessee. At the same, time, the entire accrued income-tax liability was treated as a debt owed by the assessee. The decision was in the context of section 2(m) of the Wealth-tax Act, 1957. For the purpose of the present reference, the question wheth ..... X X X X Extracts X X X X X X X X Extracts X X X X
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