TaxTMI 
TaxTMI 
1967 (12) TMI 5
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.... 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 consider as to which is the correct method to be app....
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....its 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 method to be adopted ? " Mr. Ghose, the learned couns....
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....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 Court of Australia held that the real value of shares which ....