RENUKA DR D Vs. COMMISSIONER OF WEALTH TAX

JUDGEMENT

(1.) Two questions are stated by the Income-tax Appellate Tribunal under section 27(1) of the Wealth-tax Act, 1957. They are :

(2.) So far as the first question is concerned, it is agreed by counsel for both the parties that it has to be answered in the affirmative, i.e., in favour of the Revenue and against the assessee, following the deduction of this court in Mohd. Ashroff Khan v. CWT, 1985 154 ITR 830. The question is accordingly answered. Thus, only the second question survives for consideration.

(3.) The assessment years concerned in this case are 1981-82, 1982-83 and 1983-84. On the relevant valuation dates, the assessee was holding certain shares of Biological Evans Ltd. The said company is a closely held public limited company whose shares are not quoted on the stock Exchange. The assessee valued the said shares on the basis of 'yield method', which was rejected by the Wealth-tax Officer, who valued the same on the 'break-up method'. On appeal, the Appellate Assistant Commissioner set aside the assessment so far as this aspect is concerned and directed the Wealth-tax Officer to redo the assessment after considering the assessee's objections. The Revenue appealed to the Income-tax Appellate tribunal which upheld it holding that rule 1D of the Wealth-tax Rules is mandatory and that, therefore, the valuation of the shares should be done according to the break-up method contained in the said rule. The Tribunal refused to follow the decision of the Bombay High Court in Kusumben D. Mahadevia v. N. C. Upadhya,1980 124 ITR 799 holding that rule 1D is directory. It preferred to follow the decision of the Allahabad High Court in CWT v. Padampat Singhania, 1979 117 ITR 443, where the said rule was held to be mandatory. Thereupon the assessee applied for and obtained this reference.