COMMISSIONER OF WEALTH TAX CENTRAL Vs. BALBHADRADAS BANGUR

JUDGEMENT

(1.) In this reference under Section 27(1) of the W.T. Act, 1957, we are concerned with the assessment years 1961-62 to 1964-65 for which the relevant valuation dates were March 31, 1961, March 31, 1962, March 31, 1963 and March 31, 1964, respectively. The assessee is an individual and the issue relates to the valuation of certain shares held by the assessee in limited companies which were not quoted on the stock exchange. The Revenue had gone up in appeal before the Tribunal in respect of these four wealth-tax assessment years because it was not satisfied with the valuation of shares as sustained by the AAC in respect of the following companies:

(2.) The assessee also had gone up in appeal before the Tribunal in respect of the said four wealth-tax assessment years as the assessee felt aggrieved with the valuation of shares as sustained by the AAC in respect of Mugneeram Bangur & Co. Pvt. Ltd. The face value of the said shares of the five companies was Rs. 100 each. The WTO valued the shares of the five companies on the basis of break-up value method. We will not go into the details of the said valuation. When the matter went up in appeal before the AAC, he found that the valuation of shares of General Investment Co. Ltd., Indian Investment Co. Ltd., Oriental Co. Ltd. and Luxmi Salt Co. Ltd. had been discussed threadbare by the Income-tax Appellate Tribunal in its order pertaining to the appeals of various shareholders for the assessment year 1960-61 and earlier years. The AAC, therefore, agreed with the contentions of the assessee that the yield basis was a very fair and reasonable method for arriving at the market value of the shares of the said four companies. The AAC considered the increase in bank rates of interest from 1960 onwards, the issue of new shares carrying dividend yield of over 9% from 1960 onwards, the report of the bonus commission and various other factors put forth to him on behalf of the assessee. The AAC, accordingly, held that the value of the shares of the said four companies should be computed on the basis of average yield of the immediately preceding five years at fourteen years' purchase price for the assessment year 1961-62, thirteen years' purchase price for the assessment year 1962-63, twelve years' purchase price for the assessment year 1963-64 and ten years' purchase price for the assessment year 1964-65 after deducting 10% from the yield for lack of negotiability and other adverse factors. The valuation of the shares on the said basis was directed to be adopted by the WTO after verification of the correctness of the figures as mentioned in the order of the AAC. It is not necessary for us to set out these in detail.

(3.) So far as the valuation of shares of Mugneeram Bangur & Co. Pvt. Ltd. was concerned, the AAC agreed with the WTO that the break-up method of valuation, as was adopted by him, was the only fair and reasonable one. However, the AAC directed the WTO to work out the breakup valuation of the shares of Mugneeram Bangur & Co. Pvt. Ltd., after taking into consideration the market value of the shares held by the said Mugneeram Bangur & Co. Pvt. Ltd. As mentioned hereinbefore, the matter went up before the Income-tax Appellate Tribunal. The Tribunal, after taking into consideration the rival contentions, observed in its order, inter alia, as follows: