1996 (8) TMI 33

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....orts in the direction of bringing the heirs and legal representatives were not successful. Since the function of the reference court is to answer the questions referred, taking the assistance of counsel appearing in the matter, we answered the question referred therein. We have relied on the decision of the Allahabad High Court, Kishori Lal Makundi Lal, In re [1941] 9 ITR 193. On hearing learned senior standing counsel for taxes, on the merits, as we find that the answer to the question referred is covered completely by the decision of the apex court in Bharat Hari Singhania v. CWT [1994] 207 ITR 1, leaving us to state the legal position for the guidance of the Tribunal. We take up the answer to the question accordingly. The question is ....

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....Appellate Tribunal considered the method of valuation. In conclusion reliance was placed by the Tribunal on the decision of this court in CWT v. Mamman Varghese [1983] 139 ITR 351 regarding the valuation of unquoted equity shares. The decision is to the effect that rule 1D is imperative and directs that the value of an unquoted equity share would have to be determined in accordance with the provisions of the said rule. Respectfully following the said decision that the valuation of unquoted equity shares held by the appellant in Kesaria Tea Co. Ltd., the Tribunal ordered that the share should be valued in accordance with rule 1D and not on the basis of yield method as adopted by the assessee. The Tribunal referred the above question to this ....

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....planation II is taken up for consideration with reference to sub-clause (a) of clause (i) and sub-clause (e) of clause (ii) thereof. At page 31 of the report, in this connection, it is clearly observed that Schedule VI to the Companies Act prescribes the form in which the balance-sheet of a company has to be prepared and in regard thereto out of the four columns provided therein columns Nos. (2) and (3) relate to liabilities and assets. The advance tax paid under section 2 10 of the Income-tax Act, though already paid, is invariably found as shown as an asset as required by Schedule VI. In this connection clause (i)(a) of Explanation II is referred to in the said decision which is to the effect that it shall not be treated as an asset. The ....