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2014 (5) TMI 705 - HC - Income TaxValuation of share - Block transferred from investment to stock in trade - Whether the valuation of the shares of Off-Shore India Limited made on 1st April, 2003 when the block was transferred from investment to stock-in-trade was justified in law – Held that:- The assessee did not value the shares of Off Shore India Limited on 1st April, 2003 as per the mandate appearing from the guidelines - The assessee valued the shares at more than Rs. 5 per share whereas the shares on the date of conversion had a negative value of Rs. 1.89 paisa each on the basis of the balance sheet as on 31.03.03 - both the CIT (A) and the Tribunal failed to notice the fact that a similar treatment can be made where investment was in shares of a similar nature - There is no rule or principle which enjoins similar treatment between the two dissimilar objects. The shares of Off Shore India Limited were valued at a negative price on 29th April, 2004 by the Auditor of the assessee on the basis of the balance sheet as at 31.3.2003 whereas the shares of Yield Investment Private Limited were treated by the assessee during the Financial Year 2003-04 - The shares of Yield Investment Pvt. Ltd. were tradable shares whereas the shares of Off Shore India Limited were junk shares - The AO did not in fact apply discriminatory standard - He has demonstrated that the assessee valued the closing stock with respect to the shares of Yield Investment (P).Ltd. at the same rate at which they were valued at the beginning of the year whereas the block of 45,00,000 shares of Off Shore India Limited valued by the assessee on 1st April, 2003 at more than Rs. 5/- per share was valued on 31.3.2004 at Re.1/- only - It is not a fact that the assessee had given the same treatment to the shares of Off Shore India Limited and Yield Investment (P) Ltd. – thus, the order of the Tribunal is set aside - as opined by both the CIT (Appeals) and the learned Tribunal – The Valuation of the shares of Off Shore India Ltd. would be made in accordance with law and in doing so the Explanation to Rule 11 of 3rd Schedule to the Wealth Tax Act, 1957 may be taken into consideration by the AO - Decided against Revenue.
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