Satish Chandra, C.J. - (1.) THESE Wealth-tax References relate to the assessment years 1968-69 and 1969-70. They arise under the W.T. Act. The question of law referred for our opinion is : "Whether the Tribunal was justified in accepting the assessee's statement on valuation of certain unquoted shares ?"
(2.) THE assessee owns shares in certain companies. THEse were unquoted shares. THE assessee declared their value at a figure which was worked out by calculating the break-up value as well as the average value and taking their mean to be the proper value. THE assessee further contended that this was the method adopted by it for valuing these very shares in the assessment years 1961-62 to 1966-67 and the same can be applied for the years in question. THE WTO differed. He relied on Rule 1D of the W.T. Rules and calculated the value of the shares according to the method prescribed in that rule. The assessee went up in appeal and succeeded. The AAC upheld the objection of the assessee and the valuations shown by the assessee were accepted to be correct. This view was accepted by the Tribunal. The Tribunal held that its consistent view was that the valuations shown by the assessee and accepted by them in the previous years could be accepted for the years in question as well, as the proper value of those shares. The Tribunal affirmed the order of the AAC. This matter has engaged attention of this court in CWT v. Sripat Singhania [1978] 112 ITR 363 (All). In that case, a Division Bench of this court held that Rule ID of the W.T. Rules, 1957, lays down the method of determination of the value of an unquoted equity share. This rule is not only to be followed by the WTO but the higher appellate authority as well. The Tribunal was not justified in approving a method of calculating the valuation of unquoted shares which was not in accordance with Rule 1D. This authority completely covers the point in issue before us. Mr. Khare, learned counsel for the assessee, stressed that this case requires reconsideration. The learned counsel urged that the rules were framed only in 1967. Section 7 of the W.T. Act gave a free hand to the WTO to estimate market value of the asset according to the method that he found to be most suitable. This, however, does not affect the position of the case after the rules have come into force. Learned counsel took us through the various amendments brought out in the Act and the Rules by the Amending Act of 1972, etc. In our opinion, none of these amending Acts vitally affect the view taken by this court in the case mentioned above. These amendments were there when this court expressed the opinion in the case mentioned above. Mr. Khare placed reliance on Deep Chand v. State of U.P., AIR 1959 SC 648. There the Supreme Court was considering the constitutional validity of the U.P. Transport Service (Development) Act. This case is hardly helpful. We are not called upon to decide the constitutional validity of Rule 1D, as we cannot do it in a reference. In the aforesaid case, the provision under consideration was on the question of determination of compensation by the District Judge against the order of the Transport Commissioner. In the present case, Rule 1D applies to the assessing authority, whosoever it may be, from the beginning right up to the end. It is equally applicable to the WTO as well as the higher appellate authorities including the High Court and Supreme Court while they sit on the advisory jurisdiction. The situation is distinctly different in the two cases. Though Section 7(1) in terms makes reference to the WTO, Rule 1A does not. It lays down the method for determining the market value of unquoted shares. The rule is applicable by virtue of the opening part of Section 7 of the Act, which says : "7. (1) Subject to any rules made in this behalf, the value of any asset, other than cash, for the purposes of this Act, shall be estimated to be the price which in the opinion of the Wealth-tax Officer it would fetch if sold in the open market on the valuation date."
(3.) SO long the rule was not framed it was open to the WTO to apply any method to determine the market value. After the framing of the rules the method has been prescribed by Rule 1D. Rule 1D, which is in force, should be applied in determining the market value of unquoted shares. When any higher authority, namely, the AAC or the Tribunal, deal with the market value of unquoted shares, Rule 1D being valid law, was equally available to them. They could not ignore it. In the present case, we have no compelling circumstance like in the Supreme Court decision in Deep Chand's case, AIR 1959 SC 648, that one interpretation may lead to the constitutional invalidity of the provision of a statute. A similar situation may arise under the Land Acquisition Act. If a person, aggrieved by the award of the Land Acquisition Officer made a reference, as provided, to the District Judge (sic). No one has, however, argued that the provisions contained in the Land Acquisition Act as to the determination of the compensation on the market value, are not applicable to the District Judge while hearing the reference.;