COMMISSIONER OF WEALTH TAX Vs. THIRUPATHY KUMAR KHEMKA

JUDGEMENT

(1.) THE following are the substantial questions of law raised in these Tax Case Appeals filed by the Revenue as against the order of the Tribunal.

(2.) THE Tribunal considered the question at length in the common passed in the case of Munish Kumar Khemka and others, which was followed by the Tribunal in the subsequent appeals preferred in the assessment years in respect of other shareholders.

(3.) AGGRIEVED by this, the assessee and the Revenue went on appeal before the Tribunal. The Tribunal held that considering the fact that the shares could not be traded in stock exchange by reason of the lock-in period, which was not on account of any covenant in the deed of transfer or any instrument, the question of valuation as per Rule 11 in the III Schedule did not arise. In other words, the Tribunal accepted the case of the assessee that in view of the covenant restricting the transferability of the promoter quoted shares for the specified period, the question of adopting open market value did not arise. Referring to the decision reported in [1973] 88 ITR 417 (Purushottam N. Amarsay v. Commissioner of Wealth-tax), the Tribunal directed the Assessing Officer to calculate the value, following the decision laid down by the Tribunal reported in (1990) 35 ITD 402 (WTO Vs. Trustees of HEH the Nizam's Jewellery Trust), which was based on the decision of the Apex Court reported in [1973] 88 ITR 417 (Purushottam N. Amarsay v. Commissioner of Wealth-tax) and (1970) 76 ITR 471 (Ahmed G.H.Ariff Vs. CWT). In other words, the Tribunal held that the shares not having marketability, the question of considering the open market price did not arise, nor could it be valued on the basis of the price quoted in the stock exchange. Aggrieved by this, the present appeal has been preferred by the Revenue.