TaxTMI 
TaxTMI 
1996 (8) TMI 19
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....nt made under section 210 of the Income-tax Act, in determining the market value of unquoted equity shares?" They are referred to us in pursuance of the directions of this court dated March 8, 1984, in O. P. No. 4250 of 1980. The situation takes us to the assessment year 1972-73. The first question is whether the reopening of the assessment is justified and the second question relates to the exclusion of advance tax payment under section 210 of the Income-tax Act, 1961. This is with regard to the determination of the market value of unquoted equity shares with regard to the assessment proceedings before the authorities. After hearing counsel for the parties we find that we had an occasion to consider the position with regard to both t....
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.... closely held companies valued by a Valuation Officer and prayed for substitution of the valuation in the place of original valuation, which was based on the break-up value method. The Valuation Officer had also deducted advance tax paid by the companies from the value of assets and had taken the entire provision for taxation as a liability. The Wealth-tax Officer accepted the valuation made by the Valuation Officer for the purpose of completion of assessment. However, for the subsequent years 1969-70 up to 1974-75---the assessee changed the course and valued the unquoted equity shares in these closely held companies not on the basis of the break-up value method, but on the basis of the report of the Valuation Officer. It appears that wi....
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....es in the context of the rigour of rule 1D of the Wealth-tax Rules, 1957, even though we were concerned with the aspect of cancelling the reassessment in proceedings under section 16(1)(b) of the Gift-tax Act, 1958, which are pari materia as regards the applicability of the decision of the apex court. In Bharat Hari Singhania v. CWT [1994] 207 ITR 1 the apex court has already ruled and declared that rule 1D of the Wealth-tax Rules, 1957, prescribing the break-up method for valuing unquoted equity shares of a company (other than an investment company or a managing agency company) is perfectly valid and effective. It is neither inconsistent with section 7(1) of the Wealth-tax Act, 1957, nor does it travel beyond the purview of section 7(1) of....
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....a contained in the rule. The rule is mandatory and is exhaustive on the subject. The rule cannot be worked out in the absence of a balance-sheet and this would be the requirement of the situation that the balance-sheet drawn up on a date immediately after the valuation date could be adopted as the basis and this is the most reasonable thing to do. Once the basis of working the rule is the balance-sheet, one must necessarily have the balance-sheet and without the balance-sheet the rule cannot be worked out. The apex court takes up the discussion with regard to the problem of exclusion of advance tax. It is observed that if in the case of the balance-sheet of the company the amount of tax paid, which is shown as an asset and has to be dedu....
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....mpany would constitute the basis for working the rule and the rule for ascertainment of the valuation of unquoted shares would not be workable without the balance-sheet and if the date of the balance-sheet and that of the valuation are the same, the problem would not arise at all. In the context learned counsel for the assessee placed reliance on the decision of this court in M. C. J. Rajan v. CWT [1995] 214 ITR 507. On going through the judgment we find that the position gets ruled by the decision of the apex court in the decision of Bharat Hari Singhania's case [1994] 207 ITR 1. The observations of the apex court are more specific and unambiguous and it is not possible to see that the balance-sheet constitutes at best an item of eviden....
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....which is not fulfilled or satisfied by merely producing the books of account or other evidence. The apex court had an occasion to observe and learned senior counsel relies on it that the assessee has to bring to the notice of the Income-tax Officer necessary particulars of items in the books of account or portions of documents which are really relevant and in regard thereto it cannot be assumed that the Income-tax Officer has to be circumspect to find out the truth by fathoming into the material that is produced, the assessee falling short of the required duty in regard thereto. It is in this context, counsel urged, that the statutory provision only brings on the statute what is obvious by way of the requirement as regards the removal of un....