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TMI Blog1986 (12) TMI 60X X X X Extracts X X X X X X X X Extracts X X X X ..... he value of these shares for both the assessment years on the basis of yield method. Otto India (P.) Ltd. is a going company which has been distributing maximum amount of dividend regularly for years in the past. The WTO did not accept the valuation disclosed by the assessee and he valued the shares by following the break-up value method following the principle laid down in rule 1D of the Wealth-tax Rules, 1957. 3. The assessee appealed to the AAC before whom it was contended that rule 1D is directory and not mandatory and that valuation of unquoted equity shares should be determined by following the yield method as has been laid down by the Supreme Court in the case of CWT v. Mahadeo Jalan [1972] 86 ITR 621. Reliance was also placed on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y in error in directing the WTO to recompute the value of the shares by following the yield method. 6. Shri P.N. Banerjee, the learned authorised representative for the assessee, has, on the other hand, fully supported the impugned order of the AAC. Reliance was placed on the decision of the Tribunal, Calcutta Bench 'C' in the case of Smt. Madhukant J. Shah [WT Appeal Nos. 946 and 947 (Cal.) of 1982] and also on the decision of the Tribunal, Calcutta Bench 'A' in the case of K.G.R. Nayar [WT Appeal Nos. 163 to 166 (Cal.) of 1986] in support of the contention that rule 1D is directory. 7. It was next submitted by the learned authorised representative for the assessee that in the instant case, the valuation date of the assessee and the va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion before the Tribunal, Delhi Bench 'D' in K.D. Datwani v. WTO [1986] 15 ITD 360. In that case the Tribunal followed the decision of the Delhi High Court in the case of Smt. Sharbati Devi Jhalani. In that case it has been held by the Delhi High Court that where the valuation date of the company and that of the assessee do not coincide then the applicability of rule 1D is directory and not mandatory. Following the decision of the Delhi High Court, the Tribunal in the case of K.D. Datwani held that the shares are to be valued not by applying the provisions of rule 1D unless the balance sheet date and the assessee's valuation date coincide with each other, otherwise the shares have to be valued on yield method. 9. In the case of Sharbati De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any but they were concerned with the shares of an investment company and, therefore, the role would not be attracted. These observations were pressed into service on behalf of the department in support of the view that rule 1D is mandatory. We are unable to accept this contention. The above observations made by the High Court have to be read in proper context. Their Lordships have observed that so far as rule 1D is concerned, it being a subsequent rule would not be applicable. It was, however, urged before their Lordships that as the rule was a procedural matter, it would have a retrospective effect. It was observed by the High Court that it was unable to accept the contention that the rule was merely a procedural matter because the valuati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the shares, with great respect, we cannot agree with this aspect of the matter. In any event, this is academic because the Supreme Court in the case of Mahadeo Jalan [1972] 86 ITR 621, has laid down the principles which would be applicable in resolving this controversy. " From the above observations, it is clear that their Lordships of the Calcutta High Court did not approve of the observations made by the Allahabad High Court in the case of Laxmipat Singhania according to which the value of unquoted shares should be determined by following the break-up value method as prescribed in rule 1D. In this connection, their Lordships have considered the decision of the Supreme Court in the case of Mahadeo Jalan which has dealt with the quest ..... X X X X Extracts X X X X X X X X Extracts X X X X
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