Law:

Section:

Section 7 of the Wealth-tax Act, 1957, read with rule 1D of the Wealth-tax Rules, 1957 - Value of assets, how to be determined - Whether in absence of any rule for valuation of unquoted equity shares under the Estate Duty Act, 1953 or the Estate Duty Rules, method of valuation prescribed under Wealth-tax Act, 1957 is required to be adopted - Held, yes - Whether Assistant Controller should make valuation of shares of private limited company in accordance with rule 1D and not in accordance with general break-up method - Held, yes CASE REVIEW Bharat Hari Singhania v. CWT [1994] 207 ITR 1/73 Taxman 3 (SC) and CED v. J. Krishna Murthy[1974] 96 ITR 87 (Mys.)followed and relied on. CASES REFERRED TO Bharat Hari Singhania v. CWT [1994] 207 ITR 1/ 73 Taxman 3 (SC) [Para 3] and CED v. J. Krishna Murthy [1974] 96 ITR 87 (Mys.) [Para 3]. Manish R. Bhatt for the Petitioner. B.P. Munshi and Ms. Nirali B. Munshi for the Respondent. JUDGMENT 1. In this reference at the instance of the revenue, the following question of law has been referred for our opinion :- "Whether the Appellate Tribunal is right in law and on facts in directing the Assistant Controller of Estate Duty to make valuation of shares of Private Limited Company in accordance with Rule 1D of the Wealth-tax Rules and not in accordance with the general break up method ?" 2. On the date of his death i.e., on 18-2-1979, the deceased had 206 shares of a certain private limited company. The accountable person declared the value of these shares at the rate of Rs. 1,553 per share. The computation was made in accordance with the provisions of Rule 1D of the Wealth-tax Rules, 1957. The Assistant Controller of Estate Duty did not accept the valuation made by the accountable person. According to him, the valuation should not be made in accordance with the principle laid down in the said Rule. He made addition of Rs. 10,000 to the value of land owned by the company, Rs. 33,000 to the value of the other assets mentioned in the balance sheet and Rs. 87,000 towards value of goodwill which had not been mentioned at all in the balance sheet. Thus he made additions in the value shown in the balance sheet and came to the conclusion…

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