1984 (2) TMI 142

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....ear should not be done in accordance with the provision of rule 1D of the Wealth-tax Rules, 1957 ('the Rules'). 2. The assessee held shares of Madhu Jayanti (P.) Ltd. and Jay Bharat Cotton Textiles (P). Ltd. According to the assessee, the shares were to be valued on the basis of the principle laid down by the Supreme Court in the case of Mahadeo Jalan so also on the basis of the decision of the Bombay High Court in the case of Smt. Kusumben D. Mahadevia v. CWT [1980] 124 ITR 799. The WTO rejected the assessee's submission inasmuch as he was of the opinion that the valuation of unquoted shares was to be made keeping in view the provisions of rule 1D. 3. On appeal to the AAC, it was contended on behalf of the assessee that the method of bre....

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.... is mandatory. The learned departmental representative urged that the Hon'ble Supreme Court had no occasion to consider the provisions of rule 1BB while deciding the case of Mahadeo Jalan. He, therefore, urged that the AAC was entirely wrong in applying the principle laid down by the Supreme Court in the case of Mahadeo Jalan while determining the value of the shares held by the assessee. The learned counsel for the assessee, on the other hand, strongly supported the order of the AAC. He relied on the decisions in Mahadeo Jalan's case, CIT v. Swadeshi Mining & Mfg. Co. Ltd. [1979] 116 ITR 259 (Cal.), CWT v. Executors to the Estate of Sir E.C. Benthal [1980] 121 ITR 814 (Cal.), CGT v. Smt. Kusumben D. Mahadevia [1980] 122 ITR 38 (SC) and Smt....

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....n that the order of the AAC needs no interference. The Supreme Court in the case of Mahadeo Jalan held: "The factors which are likely to determine the value of a share on any particular day or at any particular time are : (i) the profit-earning capacity of the company on a reasonable commercial basis ; (ii) its capacity to maintain these profits or a reasonable return for the capital invested ; and in special cases such as investment companies, the asset backing; and (iii) the prospects of capitalisation of its earning in the shape of declaration of bonus shares or where the company is financially and commercially sound, the prospects of issue of further capital where the existing shareholders have a right to apply for and obtain them at a....