1967 (12) TMI 5

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....of the method involving the principle of ' yield value ' in determining the value of the shares in question under section 7 of the Wealth-tax Act ? " Section 7 of the Wealth-tax Act as it stood on the date when the question came to be considered which arises for decision in this case, was as follows : " 7. Value of assets how to be determined.- (1) The value of any asset, other than cash, for the purposes of this Act, shall be estimated to be the price which in the opinion of the Wealth-tax Officer it would fetch if sold in the open market on the valuation date. " It is unnecessary to refer to the remaining portion of the section, which has no bearing on this case. In answering the question referred to us, it is necessary to con....

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....eir own purpose, and as such, the maintainable profits rather than the dividends declared, would afford a reasonable basis. We need not notice this point further, since the objection before us is only of principle, about the adoption of the ' break-up value ', method. Even in the case cited by the learned counsel, the Tribunal has categorically held that the ' break-up value ' was undoubtedly one of the recognised methods of valuation of shares of private companies. For the purpose of the present appeal we hold that the adoption of the ' break-up value ' was in order. " It is not disputed that " break-up value " is also one of the methods for the purpose of calculation. But the point for consideration is " in what circumstances is this m....

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....he value of the share as obtained in the market and not when the business is about to be disposed of : " A price based on the net value of the company's assets is appropriate where the company has disposed of its business and is in effect in course of winding up; where a purchaser of the shareholding would be in a position to put the company into voluntary liquidation. " We are satisfied that the expression " break-up " is inextricably connected with the situation where the company has reached the stage of winding-up, and that expression cannot be applied to a company, which is a going concern and there is nothing ostensibly wrong with it. Mr. Ghose also placed reliance on Mc Cathie v. Federal Commissioner of Taxation, where the High ....