Law: Wealth Tax Act, 1957

Section: 27(3),2(m),7

Law: Wealth Tax Rules, 1957

Section: 1D

Law: Indian Companies Act, (I of 1956)

Section: 205,211,217,227,349,000

Law: Estate Duty Act, 1953

Section: 17,19(5)

Wealth tax--- ---- Valuation of assets ---Unquoted equity shares---Holding company--­Company treated as accountable person for purposes of estate duty---No mention in company's balance-sheet of estate duty liability---Liability cannot be reckoned in computation of break-up value of shares for that year--­Mention of provisional demand in directors' report for next year---Demand can be treated as liability in that year---Sum shown as outstanding demand in note to profit and loss account for following year---Can be treated as liability in that year---Estate duty finally determined by order much after valuation dates in question---Cannot be treated as liability in computing break-up value of shares for years in question---Indian Estate Duty Act, 1953, Ss. 17 & 19--­Central Board of Direct Taxes Circulars Nos.2(WT), dated 31-10-1967 and 118, dated 15-9-1973. The estate of one A, who died on April 18, 1964, held 100 per cent beneficial ownership in shares in a company. The company was a holding company and its shares were not quoted. The company was held to be the accountable person in respect of the estate of A in estate duty proceedings. The estate duty proceedings were completed on January 27, 1970, and the estate duty was finally determined at Rs.1,66,48,868. In the directors' report of the company for the year ended June 30, 1964, relating to the assessment year 1965-66, the death of A was mentioned, but the balance-sheet of the company made no provision for or indication of any estate duty liability. In the balance-sheet of the company for the year ending June 30, 1965, also (relating to the assessment year 1966-67) there was no provision for the estate duty liability, but the directors' report mentioned that the company had been treated as the accountable person under the Estate Duty Act, 1953, and was served with a provisional demand. The demand was for Rs.65,50,542.73, though this sum was not mentioned in the directors' report. For the year ending June 30, 1966, relating to the assessment year 1967-68, an amount of Rs.30 lakhs being part payment of the provisional demand was debited in the profit and loss account of the company, and there was a note to…

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