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TMI Blog1987 (1) TMI 138X X X X Extracts X X X X X X X X Extracts X X X X ..... balance sheet of the business, the closing stock at the end of the year consisting of shares of various companies was valued at cost or market value, whichever was lower. In this way the value of the closing stock was worked out at Rs. 23,56,263. The WTO, however, held that where the shares in the closing stock were valued at cost, their market value should be substituted for the cost. He, therefore, picked up these shares and the market value of these shares exceeded the cost by Rs. 85,379. The WTO, therefore, while determining the value of the assessee's proprietary business M/s V.B. Gareware Co., increased the value shown by the assessee, i.e. Rs. 23,61,245 by Rs. 85,379. The WTO also did not accept the assessee's claim that the share ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vt. Ltd. under the yield capitalisation method instead of under the break-up method prescribed by r. 1D of the WT Rules, 1957 adopted by the WTO and the CWT (A) wrongly held that the closing stock of M/s V.B. Garware Co., a proprietary concern of the assessee, cannot be valued under r. 2B(1)(c) of the WT Rules and on that ground directing the WTO to adopt the value declared by the assessee. On the other hand, the grievance in the appeal filed by the assessee is that the CWT(A) wrongly directed that even the present discounted value of the amount under the Compulsory Deposit (Income Tax Payers) Act, 1974 could be in the assessee's net wealth. 4. The ld. departmental representative, Shri Kamat on the authority of the Hon'ble High Court o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earning capacity of the company. He then referred to the ruling of the Hon'ble High Court of Bombay in the case of Smt. Kusumben D. Mahadevia vs. CWT (1980) 14 CTR (Bom) 20 : (1980) 124 ITR 799 (Bom) wherein their Lordships laid down that r. 1D of the WT Rules, 1957 prescribing the break up method for valuation of unquoted equity shares of companies was merely directory and not mandatory. He, therefore, justified the direction of the CWT (A) to the WTO to value of the shares of M/s Garware Plastics and Polyster Pvt. Ltd. under the yield capitalisation method. 6. We have carefully considered the rival submissions. With very great respect to the rulings of the Hon'ble High Court of Kerala and the Hon'ble High Court of Allahabad cited by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an every share constituting the closing stock and it was, therefore, open to the WTO to substitute for the value of the shares in the closing stock taken at cost, the market value of those shares in working out the value of the assessee's proprietary business. Reference in this connection was made by him to the order of the Tribunal in the case of WTO vs. Shri Sangram Singh P.Gaekwad (WTA Nos. 923 to 930/Ahd/80) wherein the Tribunal held that r. 2B(2) can be applied in relation to each group of shares. He, therefore, justified the addition of Rs. 85,379 on this account made by the WTO and submitted to us that the addition was wrongly deleted in appeal by the CWT(A). 8. On the other hand, the assessee's ld. counsel, Shri Shah, at the outs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts written down value or its book value or the value adopted for purposes of assessment under the Income-tax Act, 1961, as the case may be, by more than 20 per cent, the value of the asset shall, for the purposes of rule 2A, be taken to be its market value" A reading of this rule clearly shows that a distinction is sought to be drawn between "an asset" on which either depreciation is admissible or depreciation is not admissible and the closing stock. Besides, sub-r. (2) of r. 2B clearly lays down that where the market value of an asset exceeds its Written down value or its book value or the value adopted for the purposes of assessment under the IT Act, as the case may be, by more than 20 per cent the value of that asset shall for the pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... WTO was therefore, not justified and was rightly deleted in appeal by the CWT (A). 10. On the issue raised in the appeal filed by the assessee, viz., the inclusion of the discounted present value of the deposit under the Compulsory Deposit (Income Tax Payers) Act, 1974 in the assessee' net wealth, which was claimed to be exempt from wealth tax, the assessee filed before us a declaration under s. 18C(1) that the identical issue cropped up for the asst. yr. 1977-78 and was referred to the Hon'ble High Court by statement of case dt. 18th Feb., 1986 in RA No. 1634/Bom/1984. The WTO by letter dt. 5th Jan.,1987 confirmed that the claim of the identical question having arisen in the reference for the asst. yr. 1977-78 (RA No. 1634/Bom/1984), w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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