Estate duty valuation of closing stock turns on open market price and disclosed purchase discount.

For estate duty valuation, the principal value of a firm's closing stock had to be estimated at the price it would fetch in the open market at the date of death. The valuation could not ignore the disclosed discount available on purchases, and the assessing authority was entitled to treat the undisputed 12.5% discount as relevant to the stock's market value under the Estate Duty Act, 1953. On that basis, the closing stock was correctly enhanced, and the issue was answered against the accountable person and in favour of the Revenue.

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Issues: Whether, for estate duty valuation, the closing stock of the firm had to be enhanced by adding the retail market profit element or whether it was to be valued on the basis of the open market price fetchable at the date of death.

Analysis: The governing rule was that the principal value of property for estate duty had to be estimated at the price it would fetch in the open market at the time of death. The valuation exercise had to proceed on the actual market value of the closing stock, and the statutory basis did not permit ignoring the disclosed special discount available on purchases. The assessing authority had proceeded on the undisputed fact that the firm obtained a 12.5% discount and had treated that element as relevant to valuation under section 36 of the Estate Duty Act, 1953.

Conclusion: The closing stock was correctly enhanced by reference to the undisputed 12.5% discount element, and the question was answered in the affirmative against the accountable person and in favour of the Revenue.

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