Law:

Section:

Section 7 of the Wealth-tax Act, 1957 – Valuation of assets – Shares – Assessment years 1957-58 to 1959-60 – Some restrictions were imposed by Pakistan Government over remittances that could be made from Pakistan to India – On account of such restrictions assessees who held shares in a company could not remit to India its profits arising from business in Pakistan and also could not pay dividends to its shareholders – Assessee adopted face value of shares while valuing said shares – However, WTO adopted break-up value method and determined value of shares of higher rate than adopted by assessee – Tribunal accepted face value of shares as adopted by assessee – Whether fact that company was unable to pay dividend to its shareholders because of restrictions on remittances from Pakistan to India would have effect of depressing value of shares in company and in any event would deter any person from offering any price for such shares in open market – Held, yes – Whether though dividend had been declared, assessee really received no yield so far as their investments were concerned and, as such, even valuation at face value would be on high side – Held, yes – Whether, therefore, Tribunal was right in accepting valuation of shares at face value – Held, yes Section 2(m) of the Wealth-tax Act, 1957 – Net wealth – Debt owed – Assessment years 1957-58 to 1959-60 – Whether on facts stated under head ‘Valuation of assets – Shares', when declaration of dividends was subject to condition that profits must become transferable or remittable from Pakistan to India and amount of dividends was payable within three months after receipt of such remittances from Pakistan, declaration of dividends had to be regarded as conditional or contingent upon happening of event indicated, and till condition was satisfied or contingency occurred, amount of dividend warrant did not become a debt payable to or receivable by holder of dividend warrant – Held, yes – Whether, therefore, amounts of dividend represented by such uncashed dividend warrants would not be includible in net wealth computation of assessee – Held, yes FACTS The company, of which the assessee was a shareholder, had bulk of its…

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