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TMI Blog1984 (3) TMI 54X X X X Extracts X X X X X X X X Extracts X X X X ..... . which were unquoted. In the return, the value of the shares was shown by the assessee as Rs. 83,200 at the rate of Rs. 20.80 per share. The Wealth-tax Officer (hereinafter referred to as "the WTO ") while examining the balance-sheet of M/s. Oswal Woollen Mills Ltd. found that the assessee had not properly valued the shares of the company. He determined the break-up value of the shares at Rs. 61.03 per share and adopted 82% of the break-up value of the shares as the market value on the valuation date. On that basis he worked out the value of the shares at Rs. 50.04 per share. Consequently, he determined the total value of the shares at Rs. 2,00,160. After the completion of the assessment, the assessee made an application under s. 35 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above 1,85,160 -------- Revised net wealth 3,36,739." The assessee went up in appeal before the AAC. It was submitted on behalf of the assessee before him that, while calculating the value of the shares, the WTO should have excluded from the figure of the total assets "provision for taxes amounting to Rs. 36,99,182" as per sub-cl. (e) of cl. (ii) of Expln. II to r. ID of the W.T. Rules, 1957 (hereinafter called " the Rules"). The AAC did not accept the contention and upheld the order of the WTO. Against the said order, the assessee went up in further appeal before the Tribunal which came to the conclusion that the value of the shares was correctly determined by the WTO in accordance with the abovesaid rule. Consequently, it affirmed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aving thus ascertained the amount to be the tax payable with reference to the book profits, the WTO has then to see whether the provision for taxation on the liabilities side of the balance-sheet is in excess of the amount of tax payable with reference to the book profits as already ascertained by him. If there is any excess in the provision for tax liabilities, then that excess is not to be treated as part of the liabilities of the company while computing the break-up value of the shares of the company. So far as provision for advance tax is concerned that provision has to be disregarded while applying the provisions of sub-cl. (e) of cl. (ii) of Expln. II. It is further observed that sub-cl. (e) of cl. (ii) and sub-cl. (a) of cl. (i) of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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) : ...... (ii) the following amounts shown as liabilities in the balancesheet shall not be treated as liabilities, namely:- ...... (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; ........ The case involves the interpretation of sub-cl. (a) of cl. (i) and sub-cl. (e) of cl. (ii) of Expln. If. Clause (i) deals with the amounts on the assets side in the balance-sheet, which are not to be treated as assets and cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1] 129 ITR 46 (Guj). In the present case, in accordance with the contention of the assessee, the amount of Rs. 34,42,312 deposited as advance tax has not been treated by the wealth-tax authorities as assets of the company and the amount of Rs. 3,80, 140 has been treated by them as its liability. However, regarding the amount of Rs. 36,99,182, which is the provision for taxes made in the balance-sheet, his contention has not been accepted and the amount has not been treated as a liability on the ground that it has not been shown that the amount beyond Rs. 3,80,140 was payable by the company as tax on its book profits. In our view, sub-cl. (e) has been correctly interpreted by the said authorities. Consequently, we answer the question in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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