Law:

Section:

Section 7 of the Wealth-tax Act, 1957, read with rules 1C and 1D of Wealth-tax Rules, 1957 – Valuation of assets – Shares – Assessment years 1965-66 and 1966-67 – Whether rules 1C and 1D inserted by Wealth-tax (Amendment) Rules, 1967 must be regarded as rules of evidence or procedure and, therefore, these rules would be applicable to pending assessments of assessee even though such assessments related to assessment years prior to date of coming into force of those rules and relevant valuation dates were also prior to that date – Held, yes FACTS The assessee had valued for the purpose of wealth-tax certain shares which had not been quoted in the stock exchange, by adopting the average of the break-up value thereof and the average yield of dividends therefrom. The WTO valued these shares on the basis of their break-up value only. On appeal, the AAC held that these shares should be valued according to rules 1C and 1D, inserted by the Wealth-tax (Amendment) Rules, 1967, published by the notification dated 6-10-1967, and directed the WTO to recompute the value of those shares accordingly. The Tribunal held that rules 1C and 1D do not have any retrospective effect and could not be applied for the valuation of the unquoted shares for the assessment years in question as the relevant valuation dates thereof preceded 6-10-1967. On reference: HELD Rule 1C prescribes the method of valuing unquoted preference shares, while rule 1D prescribes the method of valuing unquoted equity shares of companies (other than investment companies and managing agency companies). As these two rules were made long subsequent to the first exercise of the rule-making power (when the original rules were made), these rules could not be given retrospective effect and do not purport to have retrospective effect. If the method of valuation of unquoted shares is merely a matter of procedure, it follows that rules 1C and 1D which prescribe the method of valuation of unquoted shares, would be applicable to assessments pending on the day those rules came into force though the assessments relate to assessment years prior to the coming into force of those rules. But, if the method of valuation of unquoted…

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