9911796707
TMI Blog1998 (10) TMI 89X X X X Extracts X X X X X X X X Extracts X X X X ..... assets stated in the balance sheet has to be reduced by depreciation in accordance with the rates applicable under the IT Act and the Rules. The mere fact that depreciation at the said rates is not shown in the balance sheet for some reason, does not entitle the AO to take the full value of the assets minus the depreciation actually shown (and not the depreciation allowable as per the provisions of IT Act and Rules). In this respect, the AO and the learned CWT(A) have not considered the notes forming part of the accounts appended to the balance sheet. 4. That the order of the AO in valuing the equity shares of Control and Switch Gear Co. Ltd., at Rs. 419 per share as against Rs. 339 declared by the petitioner and the action of the CWT(A) in upholding the said order of the AO is against law and facts of the case." 2. Shri B.B. Ahuja, the learned senior advocate, contended that both these assessees own certain number of shares of M/s Control Switch Gear Co. Ltd. Both of them had valued those shares in conformity with the relevant rules contained in Sch. III of the WT Act, 1957. The valuation of the said shares was computed by the assessees at Rs. 339 per share on the basis of foll ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p; 58,13,934 Number of shares 13,720 Break-up value 58,13,934 = 423.75 --------- 13,720 Value (80% of break-up value) = 339 Say Rs. 339 2.1. The AO had taken the value of the fixed assets at Rs. 89,76,737 as shown in the audited balance sheet of the said company as against the value of fixed assets taken by the assessee at Rs. 76,09,000 in the aforesaid chart for computing the value of the equity share of the said company. 2.2. The learned senior advocate submitted that for purposes of computing the value of unquoted equity share, the AO also ought to have taken into consideration Note No. 2 which was forming par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.4. The learned counsel further submitted that the expression used in r. 11(2) of Sch. III "value of all assets shown in that balance sheet" does not mean that value as shown in the balance sheet is sacrosanct. There is a difference between the expression "value of all assets shown in that balance sheet" and the expression "value as shown in the balance sheet of all its assets". He, therefore, urged that the WDV of assets as per IT Rules adopted by the assessee for computation of the value of a equity share of the said company is in conformity with the balance sheet of the company read along with the notes annexed thereto and forming part of the accounts of the company. The learned senior advocate, then invited our attention towards r. 14 of Sch. III of WT Act providing for mode and manner applicable for global valuation of assets of business. Rule 14(2)(a)(i) clearly provides that value of any asset as disclosed in the balance sheet in case of depreciable assets shall be taken at the WDV as per IT Rules. A harmonious construction of rr. 11 and 14 of Sch. III also supports the value of Rs. 339 per share worked out by the assessee by adopting the WDV of the fixed assets as per IT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T Rules will also be in conformity with r. 11 and 14 of Sch. III. 2.8. Learned senior advocate also drew our attention towards the judgment of Hon'ble Supreme Court in the case of Bharat Hari Singhania & Ors. at p. 34, 207 ITR, where the conclusions arrived at by the Hon'ble Supreme Court have been summarised. The learned lawyer submitted that those findings do not in any manner go against the claim of the assessee, as the Hon'ble Supreme Court was not at all concerned with consideration of such an aspect relating to value of depreciable assets, for the purposes of valuing the unquoted equity shares. He submitted that the said judgment of Hon'ble Supreme Court, therefore, does not at all apply to the facts of the present case. 2.9. The learned counsel also invited our attention towards a judgment of Hon'ble Supreme Court in the case of CIT vs. K. Ramakrishnan (1993) 109 CTR (Ker) 254 : (1993) 202 ITR 997 (Ker) at p. 1002. The aforesaid judgment was cited with a view to support the argument that a precedent is an authority only for what it actually and explicitly decides and no more. It would be too much to imply and read into its propositions what may seem to flow even incidental ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by him regularly, the net value of the assets of the business as a whole, having regard to the balance sheet of such business on the valuation date after adjustments specified in sub-r. (2) shall be taken as the value of such assets for the purposes of this Act. (2) For the purposes of sub-r. (1)- (a) the value of any asset as disclosed in the balance sheet shall be taken to be,- (i) in the case of an asset on which depreciation is admissible, its written-down value; (ii) in the case of an asset on which no depreciation is admissible, its book value; (iii) in the case of closing stock, its value adopted for the purposes of assessment under the IT Act for the previous year relevant to the corresponding assessment year; 4.2. A plain reading of the aforesaid provisions clearly indicate that the notes annexed to the audited balance sheet and forming the part of the accounts should also be taken into consideration while computing the value of unquoted equity shares of such companies. Rule 14-although it does not apply specifically in relation to valuation of unquoted equity shares assessable as wealth in the hands of shareholder, but it certainly prescribed rules applicable for v ..... X X X X Extracts X X X X X X X X Extracts X X X X
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