COMMISSIONER OF WEALTH TAX Vs. GNANAGIRI GANESAN

JUDGEMENT

(1.) IN pursuance of the directions of this Court, the Tribunal has stated a case and referred the following questions of law for our consideration :

(2.) THE assessment year involved is 1985 86. The assessee owned certain shares in Pondicherry Papers Ltd. and the assessee filed the return under the WT Act, 1957, for the asst. year 1985 86 admitting the net wealth of Rs. 4,24,300. As far as the shares owned by the assessee in Pondicherry Papers Ltd. are concerned, the assessee has declared the value of the share as "nil". However, the WTO found that the shares in Pondicherry Papers Ltd. were listed in the Madras Stock Exchange and he valued the shares at the price quoted in the stock exchange, namely, Rs. 10.75 per share. The CIT (Appeals I), Madurai, on appeal allowed the appeal preferred by the assessee on the ground that the shares though quoted in the Madras Stock Exchange and the certificate from Madras Stock Exchange revealed that the official rate on the value of the share as on 31st March, 1985, 31st March, 1986 and 31st March, 1987 was Rs. 10.75, yet the value of the shares was a negative figure in view of the poor financial results of the company in which the assessee held the shares. He therefore held that the price quoted in the stock exchange did not give the correct market value of the shares and directed that the shares should be valued on yield basis. The Revenue carried the matter in appeal before the Tribunal. The Tribunal relied upon r. 1A(1) of the WT Rules, which defines the expression of "unquoted share" and also cl. (ka) of the said r. 1A of the WT Rules which defines the expression "share regularly quoted on the stock exchange" to record a finding that the shares of the company are not quoted shares. The Tribunal therefore held that the value quoted in the stock exchange need not be adopted as the market value of the share, in view of the fact that there was no transaction from 1979 and the value of the share was a negative figure. The Tribunal directed the WTO to value the shares on yield basis. This order of the Tribunal is challenged by the Department and on the basis of the directions of this Court, the two questions referred to earlier have been referred to us.