R.M. Sahai, J. - (1.) THE Income-tax Appellate Tribunal, Allahabad Bench, Allahabad, has referred the following question for the opinion of this court. " Whether, on the facts and in the circumstances of the case, the Tribunal was justified in approving the assessee's method of valuation in respect of unquoted shares in preference to the valuation adopted by the wealth-tax authorities as per provision of Rule 1(D) of the Wealth-tax Rules, 1957 ? "
(2.) THE short facts giving rise to this reference are : Proceedings out of which this reference has arisen related to the assessment to wealth-tax for the assessment year 1968-69. THE assessee is an individual. He owned certain shares in companies belonging to J. K. group of companies. Those shares were not regularly quoted in recognised stock exchanges. He worked out the market value of the aforesaid shares by adopting the mean of their break-up value and the fair price of the shares arrived at by taking into account the average yield of the shares on the basis of dividends declared in the immediately preceding five years taking the value at par if the yield came to 8 per cent. THE Income-tax Officer did not accept the method of valuation. According to him, unquoted shares had to be valued as per Rule 1D of the Wealth-tax Rules introduced in the year 1967. THE assessee filed an appeal but with no success. THE assessee took up the matter in further appeal before the Tribunal which accepted the assessee's method of valuation of the shares which had been accepted by the Tribunal in earlier years. Sri Upadhya, appearing for the assessee, has raised a preliminary objection that the question of law referred to this court does not arise out of the order passed by the Tribunal as that question is based on the findings recorded by it on the concession made on behalf of the revenue. In support of his sutaission he has relied upon the decision in Surjidevi Kunjilal Jaipuria Charitable Trust v. Commissioner of Income-tax [1978] 112 ITR 368 (All) (Appendix) and Commissioner of Income-tax v. Shiv Nath Prasad [1970] 77 ITR 378 (All). The principles laid down in these two decisions is beyond dispute. The question, however, is whether the findings recorded by the Tribunal in this case were based on any concession made on behalf of the revenue.
(3.) IT appears that the learned counsel for the assessee, before the Tribunal, had contended that Rule 1D was ultra vires the provisions of the Wealth-tax Act. The argument of the learned counsel for the revenue, in reply to the above contention, has been summarised by the Tribunal as follows : " Dr. Misra submitted that Section 7(1) of the Wealth-tax Act specifically mentions the Wealth-tax Officer, who alone is required to take into consideration of wealth accordingly. According to Dr. Misra, the provisions of Section 24(6) of the Act are independent and there is no conflict between the exercise of power by the Wealth-tax Officer under Section 7(1) read with Rule 1D and the exercise of its appellate power by Tribunal under Section 24(6) of the Act. He pointed out that the valuers may be required to conform to Rule 1D but this rule does not impose any fetters on the powers of the Appellate Tribunal to make a reference to them. He submitted that in that case the valuers will not be bound by Rule 1D and it is made clear by Section 24(8), which contemplates an enquiry, and determination of the value of an asset after enquiry need not take into consideration the provision of Rule 1D." Sri Upadhya has laid great emphasis on the argument of Dr. Misra before the Tribunal that the Wealth-tax Officer alone is required to take into consideration Rule 1D in making computation of wealth-tax. From this he wanted us to infer that the revenue had conceded before the Tribunal that this rule was not binding on the Tribunal. We do not find any justification for such an inference. The above argument appears to have been advanced to highlight the respective powers of the Wealth-tax Officer under Section 7(1) and of the Tribunal under Section 24(6). As a matter of fact, the assessee was the appellant before the Tribunal and he did not object to the application of the provisions of Section 24(6) for valuation of his shares. But as the validity of Rule 1D was challenged on behalf the assessee, the learned counsel for the revenue appears to have defended the validity of that rule by raising the argument that there was no conflict between Rule 1D and Section 24(6). We cannot, in the circumstances, read in the above argument any concession made on behalf of the revenue. The principles laid down in these two decisions, in our opinion, is not applicable to the present case The preliminary objection, in the circumstances, is overruled.;