Law: Wealth Tax Act, 1957

Section: 3,7,2

Law: Income Tax Act, 1922

Section: 18A,59

Law: Income Tax Act, 1961

Section: 210

Law: Wealth Tax Rules, 1957

Section: 1BB

(a) Wealth Tax- ----Valuation---Unquoted equity shares other than shares of Investment Company or Managing Agency Company---Rule 1-D prescribing uniform break-up method for valuing shares with balance-sheet of Company as base--­Even if Company were going concern---Valid---Rule-making authority--­Central Board of Direct Taxes---Right to choose one of several recognised . methods although less popular-- Can prescribe simple uniform method for all cases---Valuation Officer---Creature of statute---Bound by R.1-D in same way as he is bound by other rules and Act---Notional capital gains tax not to be deducted---Rule applicable even if assessee's valuation date does not coincide with date of balance-sheet of company---Provision for taxation---Amount of advance tax already paid, to be deducted from provision, if shown as part of liability---Indian Wealth Tax Act, 1957, Ss. 7(1), (3), 16A, 24(5), 46(1), (4)--­Indian Wealth Tax Rules, 1957, R. 1-D, Expln. II, Cls. (i) (a) & (e). Rule 1-D of the Wealth Tax Rules, 1957, prescribing the break-up method or valuing unquoted equity shares of a company (other than an investment company or a managing agency company) is perfectly valid and effective. Neither is it inconsistent with section 7(1) of the Wealth Tax Act, 1957, nor does it travel beyond the purview of section 7(1). Section 7(1) of the Wealth Tax Act, 1957, defines the expression "value of an asset". It is "the price which in .the opinion of the Wealth Tax Officer it would fetch if sold in the open market on the valuation date" but this is made expressly subject to the rules made in that behalf No guidance is furnished by the Act to the rule-making authority except to say that the rule made must lead to ascertainment of the value of the asset (unquoted equity share) as defined in section 7. It is thus left to the rule-making authority to prescribe an appropriate method for the purpose. There may be several methods of valuing an asset or for that matter an unquoted equity share. The rule-making authority cannot prescribe all of them together it has to choose one of them which according to it is more appropriate. The rule-making authority has in rule 1-D chosen the…

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