Unquoted share valuation under Schedule III follows the earlier rule 1D principle, with no change in legal effect.

Valuation of unquoted equity shares under section 7 read with Schedule III of the Wealth-tax Act was treated as governed by the same principle previously applied to rule 1D of the Wealth-tax Rules. The tribunal held that Schedule III was in pari materia with rule 1D, representing only a statutory relocation of the earlier valuation rule without any intended change in effect. As a result, the jurisdictional High Court's earlier ruling on share valuation continued to apply to Schedule III, and the assessee's contention on valuation was accepted.

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Issues: Whether the valuation of unquoted equity shares under section 7 read with Schedule III of the Wealth-tax Act had to follow the ratio of the jurisdictional High Court decision rendered in the context of rule 1D of the Wealth-tax Rules.

Analysis: The relevant provision in Schedule III was held to be in pari materia with rule 1D, the legislative change being only a bodily lifting of the earlier rule into the new statutory setting without any intended change in effect. On that footing, the earlier High Court ruling on valuation could not be treated as inapplicable merely because the valuation provision had been relocated into Schedule III.

Conclusion: The ratio of the earlier High Court decision continued to apply to valuation under Schedule III, and the assessee's contention was accepted.

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