Law: Wealth Tax Rules, 1963

Section: R-8,8(2)(c)

[Wealth Tax Rules, 1963].......Rule 8(2)(c)-Shares and Securities-Breakup value-Industry taken over by Government Compensation for acquisition of shares of taken-over industry-Computation to work out the break-up value-Depreciation not provided up in the latest balance sheet--Whether can be considered as part of the reserve for the purpose of deduction to work out the breakup value of shares of share-holders-Held no-"Depreciation", "Reserve", meaning of The short question arising for determination is could the depreciation not provided for, be deducted from the amounts to be considered in working out the Breakup Value' of the shares of the petitioners, on the basis of the audited balance-sheet. There is no doubt in the finding that the proposed depreciation could not be deducted under rule 8(2)(c) to work out the 'Break-up Value' of the petitioners' shares and the same is declared to be without lawful authority. Thus the correct net wealth would be Rs. 25,38,969 and the 'Break up Value' shall be worked out accordingly. Cases referred to: R. Sim & Co. v. Commissioner Income-Tax [1955 27 ITR 530]; Commissioner Income Tax v. The Lyallpur Cotton Mills PLD [1960 SC 48].' Commissioner of Wealth Tax v. Ganganagar Sugar Mills [1972 PTD 349]; Assessee v. Department [1969 Taxation 87] and The Principles of modern Company Law by L.C.B. Gover, P. 427. ORDER [The judgment of the Court was delivered by GUL MUHAMMAD KHAN, L]-The Management of Messrs Model Steel Mills Limited, of which the petitioners are some of the shareholders, was taken over by respondent No. 1 on 16th January, 1972, under the Economic Reforms Order (P.O.I. of 1972). Later, the shares 'Were also acquired. They have challenged through this petition the quantum of compensation awarded to them by the respondents under Article 7-C of the above Order. 2. On 15th September, 1973, the Economic Reforms (Amendment) Act, 1973, was enforced which inter alia added Article 7-B to P.O.1. of 1972. This entitled the Federal Government to acquire' the whole or a portion of the shares from all or any of the shareholders of the such company so as to vest in the Federal Government. 3, On 29th November, 1973, respondent…

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