Mandatory valuation rule for unquoted shares under wealth-tax requires break-up value method, with no officer discretion to substitute another basis.

Rule 1D of the Wealth-tax Rules, 1957 prescribes the mandatory method for valuing unquoted equity shares under the wealth-tax scheme. The rule requires valuation by the break-up value approach, and the Wealth-tax Officer has no discretion to ignore it or substitute another basis, such as a later sale price, for earlier assessment years. In the absence of material showing a different permissible valuation basis, the statutory rule must be applied to determine market value. The stated conclusion is that Rule 1D is binding in the valuation of unquoted shares and the issue is answered against the assessee.

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Issues: Whether rule 1D of the Wealth-tax Rules, 1957 is mandatory for the Wealth-tax Officer while valuing unquoted equity shares.

Analysis: The dispute concerned valuation of unquoted shares for wealth-tax purposes. The statutory scheme distinguishes quoted shares from unquoted shares and prescribes a specific method under rule 1D for determining the market value of unquoted shares by the break-up value approach. In the absence of material showing any alternative basis for valuation, the assessing authority was required to apply the statutory rule and had no discretion to ignore it or substitute a later sale price as the market value for earlier assessment years.

Conclusion: Rule 1D is mandatory, and the Wealth-tax Officer is bound to adopt it in valuing unquoted shares. The question is answered against the assessee.

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