Law:

Section:

Section 7 of the Wealth-tax Act, 1957 - Valuation of assets - Shares - Assessment years 1957-58 to 1959-60 - Assessee held certain shares of 'JC' Ltd - While determining value of these shares WTO took break-up value of shares of 'JC' Ltd. on basis of assets and liabilities of company - Tribunal held that best way of determining net assets of company for purpose of break-up value was to take net wealth as determined in wealth-tax assessments of 'JC' Ltd. and accordingly, adopted value of shares - Whether for determining 'break up value', one has to ascertain value of company's current liabilities and prior charge capital, therefore, in instant case, Tribunal was not justified in adopting net wealth of 'JC' company as determined in its wealth-tax assessment as net assets of company - Held, yes FACTS The assessee held certain shares in 'JC' Ltd. The WTO, in determining the value of these shares, tried to find the break-up value on the basis of the assets and liabilities of the company as per balance-sheets on or near about the valuation dates. He did not, however, allow any deduction for provision for taxation and provision for wealth-tax aggregating to Rs. 51,35,097 for the assessment year 1958-59. The AAC recomputed the value of the shares by the same method by deducting from the value of assets, bad debts amounting to Rs. 2,35,855 for 1957-58, Rs. 2,80,008 for 1958-59 and Rs. 3,15,889 for 1959-60. He had also granted reduction for all the years of the value of the goodwill to the extent of Rs. 10 lakhs and the value of the leasehold property to the extent of Rs. 5 lakhs. He made additions for the proposed dividends amounting to Rs. 1,20,000 for 1957-58 and Rs. 1,20,000 for 1959-60. The Tribunal held that the best way of determining the net assets of the company, in the present case, for the purpose of break-up value, would be to take the net wealth as determined in the wealth-tax assessments of the 'JC' Ltd., for the respective years. On this basis, the Tribunal's valuation per share was Rs. 1,458 for the assessment year 1957-58, Rs. 1,316 for the assessment year 1958-59 and Rs. 1,472 for the assessment year 1959-60. There was another contention before the…

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