Gross profit rate not conclusive proof for invoking Rule 2B(2); valuation issue remained factual and no question of law arose.

The Tribunal considered whether gross profit rate alone could justify invoking Rule 2B(2) of the Wealth-tax Rules, 1957 on the footing that closing stock market value exceeded book value by more than 20 per cent. It held that gross profit rate was only an indicator and not conclusive proof of market value, so the issue depended on appreciation of evidence and the factual valuation matrix. On the facts, the Revenue had not established that the statutory threshold was crossed, and the matter did not require interpretation of the rule. No referable question of law arose because the determination was factual rather than legal.

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Issues: Whether the Tribunal's finding that Rule 2B(2) of the Wealth-tax Rules, 1957 could not be invoked on the basis of the assessee's gross profit rate gave rise to a referable question of law.

Analysis: The order examined whether the Revenue's reliance on the gross profit rate of the firm was sufficient to show that the market value of the closing stock exceeded the book value by more than 20 per cent so as to attract Rule 2B(2). It was held that the gross profit rate was only an indicator and not conclusive proof of market value, and that the issue depended on the appreciation of evidence and the factual matrix of stock valuation. The Tribunal also held that, on the facts, the Revenue had not established that the statutory threshold was crossed, and that the matter did not involve interpretation of the rule so as to generate a referable question of law.

Conclusion: The Tribunal's determination was one of fact, not of law, and no referable question of law arose.

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