SENGUPTA, J. - (1.) IN this reference under S. 27(1) of the WT Act. 1957 ('the Act') for the asst. yr. 1975-76 the following question of law has been referred to his Court: "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the fair market value of the unquoted equity shares of Baharia Bros.(P) Ltd. should be computed on the basis of the balance sheet of the company drawn up on a date immediately preceding the valuation date vide Explanation (i) to r. 1D of the WT Rules ignoring the fact that the assessee had no unquoted equity shares of the company on 26th Nov., 1973, the date of the earlier balance sheet?" Shortly stated, the facts are that the assessee purchased equity shares in Baharia Bros.(P) Ltd. in July, 1974 at Rs. 256 per share, i.e., shortly before the valuation date. The shares bought by the assessee in the said company are unquoted equity shares. The WTO valued those shares at Rs.488.48 per share under r. 1D of the WT Rules, 1957 on the basis of the balance sheet of the company as on 12th Nov., 1974. The surplus arose on the revaluation of assets of the company, i.e., Baharia Bros.(P) Ltd., as on 14th Aug., 1978, i.e., a few days before the valuation date under consideration which fell on 31st Aug., 1974.
(2.) THE assessee moved the CIT (A) contending that the WTO should have calculated the value of the unquoted shares on the basis of the balance sheet of Baharia Bros.(P) Ltd. as on 26th Oct., 1973 preceding its valuation date of 31st Aug., 1974. It was further contended that if the earlier balance sheet was taken as the basis, the value of those shares would work out at Rs.79.39 per share. The CIT (A) was convinced by the aforesaid arguments of the assessee and held that under r. 1D, the valuation of unquoted shares had to be based on the balance sheet of the limited company drawn up on a date immediately preceding the valuation date (vide Explanation (i) to r. 1D). He, therefore, directed the WTO to revise his calculation on the basis of the earlier balance sheet of the limited company in accordance with r. 1D. The Tribunal dismissed that Revenue's appeal and confirmed the order of the CIT (A) by observing as under: "After hearing both the sides and after going through the orders of the authorities below and after taking into account the provisions of rules referred to by the CWT (A) we are of the opinion that there is no merit in the present appeals by the Revenue. Separate orders of the CWT (A) are quite valid and sound on the facts of the case as discussed above. In this view of matter, his orders are sustained."
(3.) ON these facts the question set out hereinbefore has been referred to the Court. We are of the view that the question has to be reframed. We, therefore, reframe the question as follows: "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the fair market value of the unquoted equity shares of Baharia Bros.(P) Ltd. should be computed on the basis of the balance sheet of the company drawn up on a date immediately preceding the valuation date vide Explanation (i) to r. 1D of the WT Rules, 1957?" ;