2001 (11) TMI 19 - HC - Wealth-tax

1. Whether Tribunal was right in holding that the liabilities in dispute relating to the purchase of cotton shown in the notes to the balance-sheet should also be deducted in determining the value of shares? - 2. Whether Tribunal was right in holding that the proposed dividend of Rs. 2, 52, 000 for the year ended on September 30 1978 declared on May 28 1979 was eligible for deduction as a liability in arriving at the value of shares of the company? - The first question is accordingly answered in favour of the Revenue as the notes in the balance-sheet do not form part of the balance-sheet. The second question is required to be answered in favour of the assessee. When a balance-sheet is not drawn up on the valuation date but the balance-sheet drawn up on a date preceding the valuation date is available that balance-sheet shall be adopted as the basis. The questions are accordingly answered.

Summary

The High Court of Madras ruled on two questions regarding the assessment of a company for the year 1980-81. The first question was answered in favor of the Revenue, stating that liabilities in dispute related to the purchase of cotton should not be deducted in determining the value of shares. The second question was answered in favor of the assessee, allowing the proposed dividend to be eligible for deduction as a liability in arriving at the value of shares.