TaxTMI 
TaxTMI 
1978 (8) TMI 113
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....Cable Co. Ltd. The assessee declared the value of these at Rs. 7.50 per shares for asst. yr. 1972-73 and at Rs. 4 per share of asst. yr. 1973-74. The WTO noticed that these shares were quoted on the recognized stock exchanges of Delhi and Madras. The last quotation of the Delhi Stock Exchange which was available was Rs.10.56 per share on 18th Aug. 1970. There was no transaction after that. On the Madras Exchange the quotation is Rs. 10 per share as on 13th Oct., 1973 but the Secretary of the said Exchange has certified that there was no transaction at all in these shares from the date of listing and that the quotation of Rs.10 per share was a purely nominal quotation. The WTO also found that the asst. yr. 1971-72 the assessee herself declar....
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....he learned AAC felt that the estimate at Rs. 10 per share was not justified at all because actual sale of these shares has taken place in the previous year ending with the relevant valuation date at Rs. 3 per share. As stated by the learned AAC in para 3 of his order, Periwal Co. Ltd. sold 40,725 shares of this company to M/s Bayunondan Rice & Oil Mills Ltd. on 29th Feb., 1973 @ Rs. 3 per share and Smt. Surji Devi Periwal sold 6601 shares of this company at the same rate to the assessee on 23rd March, 1973. The learned AAC also notice that the question of the valuation of these shares for this very assessment year came up for consideration before the learned AAC, Special Range IV, New Delhi, in the case of M/s Periwal Co. Pvt. Ltd. who fixe....
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....rt from the quoted price even if it was of a date anterior to the valuation dates. He further submitted that the actual sales of Rs. 3 per share relied upon the assessee and accepted by the learned AAC were not genuine sales. These were sales amongst the concerns and/or members of the same group and could not, therefore, be the basis for determining the market value of the shares. Proceeding further the learned Departmental Representative said that r. 1-D of the WT Rules, 1962 could not be applied in the present case as the shares were not unquoted shares. Concluding his argument he said that the learned AAC was not justified in disturbing the WTO's valuation. 5. The learned counsel for the assessee supported the orders of the learned AA....
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..... Kastoori Swamy Naidu vs. CED(3) that the quoted price could be accepted as the fair market value of the shares of a company on the valuation date only if there were transactions in the exchange within a reasonable period of the valuation date. Further the learned counsel urged that even in respect of quoted shares, as held by Madras High Court in 92 ITR 145, a different mode of valuation should be adopted if the quoted price did not reflect true market value. The learned counsel emphasized that the Supreme Court also observed in Mahadeo Jalan's(1) case that the shares of a Public Ltd. Co. could be valued on the basis of the quoted price provided there are dealings in them near about the valuation date. On these authorities, the learned co....
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....e rival submissions. We must say at the very outset that the fair market value of the shares in question was required to be determined as on the valuation dates which were 31st March, 1972 and 31st March, 1973. For this purpose the authorities had before them the quoted price and also the actual sales. The quoted price was as on 19th Aug., 1973. The actual sales were very close to the said valuation dates. If one has to choose between the two for the purpose of determining the fair market value, the choice obviously would be for the actual sale transactions near about the valuation date. The learned WTO was well aware of these actual sale transactions as the details thereof had been furnished to him by the assessee. No material exists on th....