COMMISSIONER OF WEALTH TAX Vs. ASHOK K PARIKH

JUDGEMENT

(1.) IN this case, at the instance of the Revenue, the following question has been referred to us for our opinion:

(2.) THE facts leading to this reference are as follows: We are concerned with the wealth tax assessment of the assessee before us and the assessment years under consideration are asst. yrs. 1965 66 to 1971 72. The point which arises in this reference is regarding the working out of the market value of equity shares of M/s Mehta Parikh & Co. (P) Ltd. The assessee held shares of that company and for wealth tax purposes the market value of these shares had to be included in his wealth as of the valuation date. The shares were not quoted in the market and the WTO was required to determine the market value of these shares of M/s Mehta Parikh & Co. (P) Ltd. on the basis of the break up value as provided for in r. 1D of the W.T. Rules, 1957. The WTO determined the break up value as per r. 1D as interpreted by him. While determining this value the WTO added back advance tax paid but allowed as a deduction advance tax payable as per returns of income of earlier years not disposed of.

(3.) THE assessee went on further appeal for all the seven years and the WTO filed cross objections on some other grounds which are not relevant for the purpose of this judgment. The Tribunal by a common order covering all the seven years directed that the adjustment could not be made for advance tax paid, in other words, the WTO should not make any adjustment for advance tax, if any, paid and taken to the assets side of the balance sheet while determining the value of shares on the basis of the break up value and on this aspect the Tribunal considered the various arguments advanced before it and the Tribunal interpreted the, provisions of Expln. II to r. 1D of the W.T. Rules and particularly cl. (i)(a) and cl. (ii)(e) of Expln. II to r. 1D. The Tribunal noted that if there were two possible interpretations of these clauses of Expln. II, the interpretation which was favourable to the assessee should be adopted and accordingly the Tribunal allowed the appeal of the assessee so far as that particular point of valuation of the shares of M/s Mehta Parikh & Co. (P) Ltd. was concerned. Thereafter, at the instance of the Revenue, the question hereinabove set out has been referred to us for our opinion.