- (1.) The dispute in these appeals relates to the market value of unquoted equity shares in Orient Steel (P.) Ltd. and Ajay paper Mills for the purpose of computation of the net wealth of the assessee.
(2.) In the first appeal the assessee filed a return declaring the value of each share in Orient Steel (P.) Ltd. at Rs. 16.36 per share. Then he revised it to Rs. 4.99 per share on the yield basis as according to him, the shares were not quoted in any stock exchange and the company was not in liquidation. The WTO, however, computed the value at Rs. 18 per share in accordance with rule 1D of the Wealth-tax Rules, 1957 (the Rules). In the second year the dispute relates to the shares in Ajay Paper Mills which the assessee estimated at Rs. 10 per share but the WTO computed at Rs. 16.83 again in accordance with rule 1D. The assessee filed appeals for both the years in question before the AAC and relied upon the decision of the Supreme Court in the case of CGT v. Smt. Kusumben D. Mahadevia, 1980 122 ITR 38 for the proposition that the shares had to be valued according to the profit-yielding method, i.e., on the maintainable profit basis. The AAC accepted this contention and directed the WTO to value the shares on the yield method. The revenue has come up in second appeal before us.
(3.) We have heard the representatives of the parties at length in these appeals. A number of authorities were cited by the representative of the department for the proposition that the value of these shares should be computed in accordance with rule 1D. For example, reference was made to CWT v. Smt. Chandrakala Lal, 1978 111 ITR 185, which lays down that the proper method of valuation. Similarly, in CWT v. Laxmipat Singhania, 1978 111 ITR 272, it was held that rules 1C and 1D inserted in the Rules, 1967 were applicable to pending assessments even though assessment related to earlier years prior to the date of these Rules having come into force. Reference may next be made to another two judgments of the Allahabad High Court in CWT v. Sripat Singhania, 1978 112 ITR 363 and Bharat Hari Singhania v. CWT, 1979 119 ITR 258, wherein the expression as it thinks fit in section 25 of the Wealth-tax Act, 1957 was held not to take away of whittle down the binding effect of rule 1D and it was held that the Tribunal was not justified in approving the assessees method of valuation of unquoted equity shares which were not in accordance with the Rules. Lastly, reference may be made of CWT v. Mamman Varghese,1983 139 ITR 351 . for the proposition that rule 1D was mandatory and its provision had to be followed in determining the value of the unquoted equity shares of companies for wealth-tax purpose.;