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TMI Blog1981 (8) TMI 99X X X X Extracts X X X X X X X X Extracts X X X X ..... rule 1D of the Wealth-tax Rules, 1957. This rule provides for the valuation of the shares, which are not regularly quoted at any recognised stock exchange. The contention was rejected by the GTO who held that rule 1D of the Wealth-tax Rules cannot be applied, as rule 10 of the Gift-tax Rules provides for the valuation of the shares. He valued the shares on the basis of the balance sheet and the average net profit for five years and added to the same the value of the goodwill calculated as equal to three years' net profit. The break-up value thus calculated by him came to Rs. 366.22 per share for the assessment year 1973-74 and Rs. 369.35 per share for the assessment year 1974-75. He levied gift-tax on this basis. 3. In the appeal filed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the shares for the purposes of the Act, the valuation has to be made in accordance with the well recognised methods of valuation and that the method of valuation prescribed by rule 1D of the Wealth-tax Rules being the only statutorily recognised method of valuation of unquoted shares, it would not be wrong to adopt that method for valuation of the shares for the purpose of estate duty also. It is further held by the Karnataka High Court that in so calculating the value, the goodwill value of the company should not be included. The position is same with regard to the Gift-tax Act. No rulings taking a different view of the matter were brought to our notice. The ruling of the Supreme Court in CGT v. Smt. Kusumben D. Mahadevia [1980] 122 ITR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thod of valuation of the shares. 7. During the course of the hearing of the appeals, references were also made to the decision of the Supreme Court in Smt. Kusumben D. Mahadevia that the proper method of valuing the shares of a running concern is by employing the profit yielding method and not the break-up value method. It is not necessary to go into this aspect of the case, because it is found from the calculations furnished by the assessee at the time of the hearing that the value as per the profit yielding method will be far less than the value calculated on the basis of the break-up value method, which has been accepted by the assessee. 8. In view of what is stated above, the appeals by the department have to fail. 9. In her appea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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