KIKABHAI BHAGUBHAI Vs. COMMISSIONER OF WEALTH TAX

JUDGEMENT

(1.) IN this reference under section 27(1) of the Wealth -tax Act 1957 (hereinafter referred to as the Act), the following question has been referred to us by the Tribunal :

(2.) IN this reference, cases of two different assessees have been consolidated and referred to the High Court because there is a common question between the cases of the two assessees. The assessee, Kikabhai Bhagubhai, is a dealer in shares and, so far as he is concerned, the assessment year is 1963 -64, the relevant valuation date being November 8, 1961. So far as the assessee, Ramprasad Manilal Bhagat, is concerned, the assessment years are 1961 -62 and 1963 -64, the relevant valuation dates being October 20, 1960, and November 8, 1961, respectively. Ramprasad is also a dealer in shares. Each of these two assessees kept regular books of account for his respective share business and for other activities. So far as Kikabhai was concerned, as on the valuation date, i.e., November 8, 1961, the value of the shares in stock shown in the balance -sheet is Rs. 3,10,279 on the basis of the cost price of the shares. In the case of Ramprasad, the value of the shares in stock as on the valuation date was Rs. 1,72,334 as of October 20, 1960; and Rs. 1,52,513 as of November 8, 1961. Each of these two assessees claimed before the Wealth -tax Officer that the shares in stock should be valued on the basis of the books of account of the assessee concerned and the balance -sheet drawn in the light of those books of account and in this connection the assessee relied upon section 7(2)(a) of the Act. This contention of the assessees was not accepted by the Wealth -tax Officer in the relevant assessments and the officer valued the shares in stock at the prevalent market price as on the relevant valuation date. Thereafter, appeals were filed by the assessees against the orders of the Wealth -tax Officer; and the Appellate Assistant Commissioner confirmed the view of the Wealth -tax Officer, viz., that the assessee had no right under section 7(2)(a) to insist on the book value of the shares being accepted instead of the market value under section 7(1). In further appeals to the Tribunal, the Tribunal came to the conclusions that the Wealth -tax Officer had the authority to compute the valuation of the assets under section 7(1) and was well within his rights in doing so. We may mention at this stage that in connection with the assessee, Kikabhai, valuation on the basis of the market price on the shares as of November 8, 1961, came to Rs. 9,21,212 against the book value of Rs. 3,10,279. In the case of the assessee, Ramprasad, as on October 20, 1960, the valuation on the basis of market price came to Rs. 3,25,379, a against the book valuation of Rs. 1,72,334; and the Appellate Assistant Commissioner came to the conclusion that the valuation on the basis of the market price should be reduced by Rs. 954. For the assessment year 1962 -63, i.e., as on the valuation date, November 8, 1961, according to the book value of the shares in stock of Ramprasad came to Rs. 1,15,513 and on the basis of the market value, the value came to Rs. 4,00,840.

(3.) SECTION 7(1) of the Act, as it stood at the relevant time, provided :