COMMISSIONER OF WEALTH TAX Vs. MAMMAN VARGHESE

JUDGEMENT

(1.) AT the instance of the Revenue, the IT Tribunal, Cochin Bench, has referred the following question of law for our determination, viz.:

(2.) WE may notice the relevant section as well as the rule under the WT Act: Sec. 7 and r. ID read as follows:

(3.) IN the context and from the purport of the section and the rule, we do not see any warrant or justification for construing the expression "shall" in the section and the rule as "may" or in understanding this provision as directory and not mandatory. On the other hand, we think, that effect should be given to the plain and simple provision of the rule. Counsel for the Revenue cited the decisions in CWT vs. Sripat Singhania 1977 CTR (All) 119 : (1978) 112 ITR 363 (All) and CWT vs. Padampat Singhania (1979) 9 CTR (All) 56 : (1979) 117 ITR 443 (All). In the earlier of these cases, a Division Bench of the Allahabad High Court explained the position thus : Rule 1D lays down the method of determination of the value of an unquoted equity share of any company other than an investment company or a managing agency company. There is nothing in this rule to indicate that it shall be followed only by the WTO. The Act provided that so long as the rules are not framed, the WTO shall estimate the price which it would fetch if sold in the open market on the valuation date. After the framing of the rules in 1967, the valuation of unquoted equity shares has to be determined under S. 7(1) r/w rule 1D. Relying on the observation in CIT vs. McMillan & Co. (1958) 33 ITR 182 (SC), counsel for the Revenue has urged that the Tribunal exercises the same powers as are exercised by the WTO under S. 7(1) while valuing an asset. He has urged that the mere use of the word 'in the opinion'does not in any manner indicate that the rule is not binding on the Tribunal. In McMillan & Co.'s case (supra), the Supreme Court while construing S. 31 of the Indian IT Act, 1922, explained the powers of the AAC, thus :