AJIT K.SENGJPTA, J. - (1.) IN this reference under S. 27(3) of the WT Act, 1957, the following questions of law have been referred to this Court : "1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that for the purpose of valuation of unquoted shares application of r. 1D of the WT Rules is directory and not mandatory in that view, the order of the WTO wherein the valuation of unquoted shares was determined on yield method was not erroneous and prejudicial to the interest of the Revenue ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the CWT wrongly assumed jurisdiction under S. 25(2) of the WT Act in the case and thereby cancelling the order of the CWT ?"
(2.) SHORTLY stated the facts are that the assessee, Mr. T. Bhaskaran, is an individual. The assessment year involved is 1982-83, the valuation date being 31st March, 1982. The net wealth of the assessee on the aforesaid valuation date included share of M/s Otto India Pvt. Ltd. The WTO valued the above shares on yield basis as per the order of the AAC dt. 30th Sept., 1982. The CWT, Calcutta initiated proceedings under S. 25(2) of the WT Act as in his opinion the WTO should have taken the value of shares of M/s Otto India Pvt. Ltd. under r. 1D of the WT Rules and not on yield basis. The CWT accordingly issued show-cause notice to the assessee. Before the CWT, the assessee relied upon the decision of the Delhi High Court in the case of Sharbati Devi Jhalani vs. CWT (1986) 54 CTR (Del) 85 : (1986) 159 ITR 549 (Del), of the Bombay High Court in the case of Smt. Kusumben D. Mahadevia vs. N.C. Upadhya, CWT (1980) 14 CTR (Bom) 20 : (1980) 124 ITR 799 (Bom), and also the decision of the Supreme Court in the case of CWT vs. Mahadeo Jalan & Ors. 1972 CTR (SC) 395 : (1972) 86 ITR 621 (SC) and also on some other decisions of the Tribunal and contended that the provisions of r. 1D were directory and not mandatory and as such there was no error in the assessment order.
(3.) THE CWT considered the submissions advanced before him. He held that the decisions of the Delhi and Bombay High Courts need not be followed. With reference to the observations of the Supreme Court the CWT observed that the above case was not relevant to decide the applicability of r. 1D of the WT Rules. In the above circumstances, he set aside the assessment and directed the WTO to make fresh assessment by applying r. 1D of the WT Rules for valuation of unquoted shares of M/s Otto India Pvt. Ltd.;