PREM SHAMSHER SINGH Vs. COMMISSIONER OF WEALTH TAX

JUDGEMENT

(1.) These twenty two references have been made by the Income-tax Appellate Tribunal (in short the Tribunal) under Section 27(1) of the Wealth-tax Act, 1957, (in short the Act) at the instance of the assessees and the revenue. As the issues involved in all the referneces are, in substance, the same, these are being disposed of by this common judgment. However, the format of questions being different in the case of each of the assessees, we set out the questions referred in each of these references respectively: W.T. Rs. 87-96 (A.Y. 1966-67 to 1970-71) "1. Whether on the facts and in the circumstances of the case, the Tribunal is justified in holding that Rule ID of the Wealth-tax Rules, 1957 is in-applicable to the present case as it is in conflict with the substantive provisions of the Act including the charging section 3?

(2.) Whether, on the facts and in the circumstances of the case, the Tribunal is justified in holding that tax deduction on enhanced compensation not provided for in the balance sheet of the company should be allowed as a deduction on equitable basis for the purpose of determination of the value of the shares on the basis of break up value?

(3.) Whether on the facts and in the circumstances of the case, the Tribunal is justified in holding that while determining the market value of unquoted shares of a company, no deduction can be allowed under Rule ID of the Wealth-tax Rules, 1957 in respect of liability for tax relating to an amount appearing as liability in the balance sheet which is claimed to be exempt but is held liable to tax in the hands of the company?" W.T. Rs.101-106/82 (A.Y.1967-68 to 1969-70) "(i) Whether on the facts and in the circumstances of the case, the I.T.A.T. was legally justified in treating the enhanced compensation of Rs.4,91,723.00 as part of the assets of the company in computing the value of unquoted shares under the provisions of Rule ID of the W.T. Rules, 1957? (ii) Whether on the facts and in the circumstances of the case, the Tribunal is correct in holding that the tax liability in respect of the enhanced compensation though it was not shown in the balance-sheet of the company for any of the three assessment years 1967-68, 1968-69 and 1969-70 should be allowed as deduction while computing the value of the shares of the company in accordance with Rule ID of the W.T.Rules 1957 ?" W.T. Rs.142-147/83 (A.Y. 1964-65 to 1969-70) "Whether, on the facts and in the circumstances of the case, the Incometax Appellate Tribunal was legally justified in treating the enhanced compensation received by M/s D.L.F. Housing Construction Pvt. Ltd and M/s Delhi land & Finance Pvt. Ltd. as part of the assets of the said companies in computing the value of the unquoted shares under the provisions of Rule ID of the Wealth-tax Rules, 1957 for the purposes of inclusion towards the net wealth of the assessee during the assessment years 1964-65 to 1969-70?" 2. In so far as the first question in W.T.R. Nos. 92-96 of 1978 is concerned, learned counsel for the assessee rightly and fairly conceded before us that answer to the question stands concluded in favour of the revenue and against the asses- see by a recent decision of the Supreme Court in Bharat Hari Singhania And Others Vs'. Commissioner of Wealth-tax and Others, (1994) 207 ITR 1. The question is, therefore, accordingly answered. 3. As regards the other questions, the issue relates to the valuation of unquoted shares of two companies viz., M/s D.L.F. Housing & Construction Pvt. Ltd., and M/s Delhi Land & Finance Private Limited. We are thus concerned with the interpretation of Rule ID of the Wealth-tax Rules, 1957, which prescribes the manner in which the market value of unquoted equity shares of companies, other than investment and managing agency companies is to be determined and as held by the Supreme Court in Bharat Hari Singhania's case (supra), there is no other method prescribed for the valuation of such shares.