Gratuity provision treated as contingent liability and not deductible when valuing unquoted shares for wealth-tax purposes.

Provision for gratuity was treated as a contingent liability, not an accrued or ascertained liability, for computing net wealth under the Wealth-tax Act and Rules. When unquoted shares are valued under the break-up value method, the same treatment applies to an individual assessee as to a company, and no distinction was accepted on that basis. The practical effect is that the gratuity provision was not deductible in determining the market value of the unquoted shares.

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Issues: Whether the provision for gratuity was an ascertained liability deductible while determining the market value of unquoted shares for wealth-tax purposes.

Analysis: The liability towards gratuity was treated as contingent and not as an accrued or ascertained liability for computation of net wealth under the Wealth-tax Act and Rules. In valuing unquoted shares under the break-up value method, the same principle was applied to an individual assessee as in the case of a company, and no relevant distinction was accepted on that basis.

Conclusion: The provision for gratuity was not deductible while determining the market value of the unquoted shares.

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