Yield method governs valuation of unquoted shares of going concerns absent exceptional circumstances.

Unquoted equity shares of going concerns, not ripe for liquidation, were to be valued on the yield method rather than the break-up value method for reference purposes under the Gift-tax Act. The valuation issue was treated as already settled by binding Bombay High Court authority, supported by the Supreme Court, and no exceptional circumstances were shown to justify departure. On that basis, the Tribunal correctly declined to make a reference and the yield method was held to be the proper basis of valuation.

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Issues: Whether unquoted equity shares of going concerns, in the absence of exceptional circumstances, were to be valued on the yield method rather than the break-up value method for the purposes of a reference under section 26(3) of the Gift-tax Act, 1958.

Analysis: The assessment years concerned related to sales of unquoted equity shares of companies which were undisputedly going concerns and were not ripe for liquidation. In such circumstances, the valuation question had already been conclusively governed by binding authority of the Bombay High Court, which in turn drew support from the Supreme Court decision referred to in the judgment. Since no exceptional circumstances were shown, the Tribunal correctly treated the matter as concluded by the existing decisions and declined to make a reference.

Conclusion: The valuation was rightly held to be on the yield method and not on the break-up value method, and the refusal to make a reference was justified.

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