Law:

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Section 27(3) of the wealth-tax act, 1957-Reference-Question of fact-Assessee held certain unquoted shares of company p which held shares in company Q-Shares of company Q had become valueless as Q's accumulated losses exceeded its share capital-WTO accepted face value of shares of P held by assessee to be correct but commissioner set aside WTO's order on revision valuing assessee's shares in company P by applying rule 1D-tribunal held that shares of P in Q being valueless, in view of explanation 11(i)(b ) to rule 1D WTO's order was correct and no revision was called for-Whether tribunal was justified and no question of law arose from its order-Held, on facts, yes Facts The assessee held shares of P, a private limited company, to the tune of Rs. 75,000 at face value. The WTO accepted this value in the original assessment. The Commissioner subsequently passed an order under section 25(2), holding that the WTO's order accepting the shares at face value was erroneous and prejudicial to the interests of the revenue. He valued the shares of Rs. 192 per share by applying rule 1D. On appeal, the Tribunal agreed to the application of rule 1D as the shares involved were unquoted. However, while making calculations under that rule, the balance sheet of company P had to be referred to, which showed an investment of Rs. 17,85,600 in the shares of Q, a public limited company. As per the balance sheet of company Q, its accumulated losses exceeded its total share capital, so that its shares had become valueless. Consequently, while valuing the shares of company P, the Tribunal excluded the sum of Rs. 17,85,600 from its assets, as the amount represented shares of Q which were valueless. On this calculation, the Tribunal found that the WTO had made no error while taking the shares of company P at their face value in the original assessment of the assessee, and held that the WTO's order required no revision under section 25(2). The Tribunal also rejected the revenue's reference application under section 27(1). On application under section 27(3) : Held The instant case would be covered by Explanation 11(i)(b ) to rule 1D which, inter alia, lays down that any amount shown as an…

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