TaxTMI 
TaxTMI 
1984 (3) TMI 54
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....and adopted 82% of the break-up value of the shares as the market value on the valuation date. On that basis he worked out the value of the shares at Rs. 50.04 per share. Consequently, he determined the total value of the shares at Rs. 2,00,160. After the completion of the assessment, the assessee made an application under s. 35 of the W.T. Act, 1957, for rectification of the value of the shares as per the W.T. Rules, 1957, on May 19, 1971. Therein he made prayer that the value of the shares be reduced to Rs. 20.15 from Rs. 50.04 per share in the assessment order. The WTO rejected the said prayer. However, he held that there was a mistake in calculation in the assessment order and, therefore, he recalculated the value of the shares at Rs. 46.29 per share. In doing so he worked out the value of the shares and the revised net wealth of the assessee as under: Rs. &nb....
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.... loans 14,01,136 3. Current liabilities & provisions 58,42,998 Less provisions for taxes 36,99,182 --------- &n....
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....p; ----------- Net assets 56,70,138 No. of equity shares 94,933 Break-up value per share Rs. 59.73 77 1/2% thereof Rs. 46.29 The revised net wealth of the assessee is computed as under : Net wealth assessed as per order, dated 24-10-1968 &nbs....
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.... 3,36,739." The assessee went up in appeal before the AAC. It was submitted on behalf of the assessee before him that, while calculating the value of the shares, the WTO should have excluded from the figure of the total assets "provision for taxes amounting to Rs. 36,99,182" as per sub-cl. (e) of cl. (ii) of Expln. II to r. ID of the W.T. Rules, 1957 (hereinafter called " the Rules"). The AAC did not accept the contention and upheld the order of the WTO. Against the said order, the assessee went up in further appeal before the Tribunal which came to the conclusion that the value of the shares was correctly determined by the WTO in accordance with the abovesaid rule. Consequently, it affirmed the findings of the AAC. On an application of the assessee under s. 27(1) of the Act, the following question of law has been referred to this court for its opin....
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.... the shares of a company, the advance tax paid and shown on the assets side of the balance-sheet of the company cannot be deducted from the tax payable in determining whether the provision for taxation is in excess over the tax payable with reference to the book profits in accordance with the law applicable thereto within the meaning of cl. (ii)(e) of Expln. II. We have given due consideration to the argument but regret our inability to accept the same. In order to determine the question, it is necessary to reproduce the relevant part of r. ID which is as follows: " ID. The market value of an unquoted equity share of any company, other than an investment company or managing agency company shall be determined as follows : The value of all the liabilities, as shown the balance-sheet of such company, shall be deducted from the value of all its assets shown in that balance-sheet. The net amount so arrived at shall be divided by the total amount of its paid-up equity share capital as shown in the balancesheet..." Explanation II.-For the purposes of this rule (i) the following amounts shown as assets in the balance-sheet shall not be treated as assets, namely: (a) any amou....