CONTROLLER OF ESTATE DUTY Vs. S M ZAKI

JUDGEMENT

(1.) At the instance of the Controller of Estate Duty, West Bengal, the following question of law has been referred to this court under Section 64(1) of the Estate Duty Act, 1953 :

(2.) The facts leading to this reference are that one Sk. Md. Naqui died on or about August 27, 1969. The deceased, at the time of death, held shares of M/s. Detinners Pvt. Ltd., M/s. Metale Products Pvt. Ltd. and M/s. Bengal Cold Storage Pvt. Ltd. These were unquoted shares. The Assistant Controller, while valuating these shares on the break-up method had taken into account the value of the goodwill of these companies though not shown in the balance-sheets of the companies concerned. In this way, he valued the shares of (1) M/s. Detinners Pvt. Ltd. at Rs. 4,732 per share (2) M/s. Metale Products Pvt. Ltd. at Rs. 259.20 per share and (3) M/s. Bengal Cold Storage Pvt. Ltd. at Rs. 73.60 per share.

(3.) Aggrieved by the said action of the Assistant Controller, the assessee brought the matter by way of appeal before the Appellate Controller. On the strength of the decision of the Mysore High Court in CED v. J. Krishna Murthy [19741 96 ITR 87, the Appellate Controller held that there was no case for the Assistant Controller to add the value of the goodwill of the companies concerned to their respective assets to determine the value of each of these shares on break-up value method. He further held that Rule 1D of the Wealth-tax Rules, 1957, constitutes a sound basis for the valuation of unquoted shares in estate duty proceedings. He, accordingly, on the strength of the said Rule 1D, valued the said shares on the date of the death of the deceased at Rs. 2,354 per share in the case of M/s. Detinners Pvt. Ltd., Rs. 162 per share in the case of M/s. Metale Products Pvt. Ltd. and Rs. 55.29 per share in the case of M/s. Bengal Cold Storage Pvt. Ltd.