COMMISSIONER OF WEALTH TAX Vs. RAJENDRA SINGH SINGHI

JUDGEMENT

(1.) This is a reference under Section 27(1) of the Wealth-tax Act, 1957. The assessee is an individual. The Wealth-tax assessment years are 1957-58, 1958-59 and 1959-60, for which the relevant valuation dates are the 31st March, 1957, the 31st March, 1958, and the 31st March, 1959, respectively. The assessee held 114 shares of Jhagrakhand Colliery Private Ltd. The valuation of these shares, according to the assessee, the Wealth-tax Officer and the Appellate Assistant Commissioner was as follows : Assessment year Valuation per share according to the assesses. Valuation per share according to the Wealth-tax Officer. Valuation per share according to the Appellate Assistant Commissioner. <FRM>JUDGEMENT_245_ITR72_1969Html1.htm</FRM>

(2.) The Wealth-tax Officer, in determining the value of these shares, tried to find the break-up value on the basis of the assets and liabilities of the company as per balance-sheets on or near about the valuation dates. He did not, however, allow any deduction for provision for taxation and provision for wealth-tax aggregating to Rs. 51,35,097 for the assessment year 1958-59. The Appellate Assistant Commissioner recomputed the value of the shares by the same method by deducting from the value of the assets, bad debts amounting to Rs. 2,35,855 for 1957-58, Rs. 2,80,008 for 1958-59 and Rs. 3,15,889 for 1959-60. He had also granted reduction for all the years of the value of the goodwill to the extent of Rs. 10 lakhs and the value of the leasehold property to the extent of Rs. 5 lakhs. He made additions for the proposed dividends amounting to Rs. 1,20,000 for 1957-58 and Rs. 1,20,000 for 1959-60.

(3.) The department as well as the assessee were aggrieved by the Appellate Assistant Commissioner's valuation aforesaid and appeals were preferred to the Tribunal. Before the Appellate Tribunal there was no dispute that the break-up value did not reflect a fair estimate of the market value. The dispute was with regard to the deductions or additions as made by the Appellate Assistant Commissioner in computing the net assets of the company. The department agitated only the general condition as to whether the Appellate Assistant Commissioner was justified in reducing the valuation.