1990 (1) TMI 69 - HC - Wealth-tax

Court clarifies Wealth-tax Rule 1D on valuation dates; Valuation Officer's discretion key.

The court held that rule 1D of Wealth-tax Rules is mandatory only when the valuation dates of the company and assessee coincide; otherwise, it is ... - Issues:Interpretation of rule 1D of Wealth-tax Rules for valuation of unquoted shares when valuation dates of the company and assessee do not coincide.Analysis:The petitioner sought reference of a question regarding the application of rule 1D of Wealth-tax Rules for valuation of shares of a company. The court noted that the question was covered by a previous Division Bench authority. The petitioner argued that the rule was not correctly applied by the Tribunal, contending that the rule should apply even when valuation dates do not coincide. However, the court disagreed, stating that rule 1D is mandatory only when the valuation dates of the company and assessee are the same. In cases where the dates differ, the application of rule 1D is considered directory, allowing the assessee to present alternative valuation methods to the Wealth-tax Officer.The court clarified that if there is a discrepancy in the valuation between the assessee and the Wealth-tax Officer, a reference under section 16A to the Valuation Officer is required. The Valuation Officer is mandated to determine the value of the asset based on its market value on the valuation date, as per section 7(3) of the Act. The Valuation Officer is not bound by rule 1D and has the authority to value unquoted shares based on what they would fetch if sold in the open market, as specified in previous Supreme Court decisions.Ultimately, the court dismissed the petition, stating that the question of law was academic due to a previous decision in a similar case involving the same assessee. The court emphasized that the Valuation Officer is not bound by section 7(1) and related rules for valuing unquoted shares, reiterating the guidance provided by previous Supreme Court decisions.