Share valuation must reflect proven consideration and real commercial value, not conjecture or inflated asset estimates.

Share valuation for income-tax purposes must rest on reliable evidence and commercial reality, not conjecture or inflated asset values. Where a company had not commenced production, was heavily indebted, and showed no real appreciation in assets, an enhanced per-share valuation was not justified. The Revenue also failed to prove through bank correspondence or later statements that the assessee had paid more than the declared consideration, as the material was uncertain, contradictory, and insufficient. The addition was therefore not sustained and the declared purchase price was accepted.

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Issues: Whether the addition made by valuing the shares of Angoora Wool Combers (P) Ltd. at a much higher figure and treating the assessee's purchase price as understated was sustainable; and whether the Revenue could rely on the additional material sought to be produced to support that valuation.

Analysis: The share transfer had to be judged on the surrounding commercial realities. The company had not commenced production, was heavily indebted, had not paid instalments for the land, and the machinery and assets had not shown any real appreciation warranting a steep enhancement in value. The Revenue's reliance on alleged bank correspondence and later statements from the earlier owners did not establish that the assessee actually paid more than the declared price. The material from the earlier owners was found to be uncertain, contradictory, and insufficient to displace the assessee's version. The attempt to introduce further documents was also ineffective, as the material did not convincingly prove suppression of consideration and could not justify the adopted per-share valuation.

Conclusion: The addition based on the enhanced share valuation was not sustained and the assessee's declared purchase price was accepted.

Ratio Decidendi: A share valuation for income-tax purposes cannot rest on conjecture or inflated asset values; unless the Revenue proves with reliable material that the declared consideration is understated, the assessee's stated transaction value cannot be displaced.

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