Law: Income Tax Act, 1922

Section:

Wealth tax---Valuation---Unquoted shares of private company---Provision for taxation---Advance tax paid and shown on assets side of balance¬sheet---To-be deducted from tax payable in determining whether provision for taxation is in excess over tax payable with reference to book, profit--¬Indian Wealth Tax Act, 1957---Indian Wealth Tax Rules, 1957, RAD, Expln. II, cl (ii)(e). Held, that the Tribunal was not right in directing the Wealth Tax Officer to value the unquoted shares of the private companies by holding that the advance tax paid under the Income Tax Act, 1961, and shown on the assets side of the balance-sheet of the said company could not be deducted from the tax payable in determining whether the provision for taxation was in excess over the tax payable with reference to the book profit. Bharat Hari Singhania v. CWT (1994) 207 ITR 1 (SC) fol. CWT v. Ashok K. Parikh (1981) 129 ITR 46 (Guj.) ref. JUDGMENT R. K. ABICHANDANI, J. ---The Income-tax Appellate Tribunal has referred the following question for the opinion. of this Court under section 27(1) of the Wealth Tax .Act, 1957: "Whether the Appellate Tribunal is right in law and on facts in directing the Wealth Tax Officer to value the unquoted shares of the private limited companies by holding that the advance tax paid under the , Income Tax Act, 1961, and shown on the assets side of the balance-sheet of the said companies cannot be deducted from the tax payable, in determining whether the provision for taxation is in excess over the tax payable with reference to the book profit in accordance with the law applicable hereto, within the meaning of clause (ii)(e) of Explanation II to rule ID of the Wealth Tax Rules, 1957?" The relevant assessment year is 1983-84. The assessee had claimed .that the unquoted shares of the private limited company be valued as per the provisions of rule ID of the Wealth Tax Rules and while doing so, advance tax paid and shown on the assets side of the balance-sheet cannot be deducted from the provision made for tax payable. The Wealth Tax Officer rejected this claim. The Commissioner of Wealth Tax (Appeals) directed the Wealth Tax Officer to value the unquoted shares of the…

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