TMI Blog1992 (8) TMI 153X X X X Extracts X X X X X X X X Extracts X X X X ..... nd not Rule 1D of the Wealth-tax Rules, as adopted by the Assessing Officer. The CGT(A) followed the decision of the Tribunal, Pune Bench, in the case of Chowgule group of cases for wealth-tax purposes. The CGT(A) held the same method of valuation is to be made for transfer of shares also and if it is so adopted, there would be no gift liable to tax. Therefore, he cancelled the Gift-tax assessments made by the Assessing Officer. 3. Revenue has taken common grounds to urge that the CGT(A) erred in cancelling the Gift-tax assessments by holding yield method as proper method of valuation and he ought to have considered that there are no sections and Rules in Gift-tax Act and Rules corresponding to section 7 of the Wealth-tax Act and Rule 1D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a category of taxable assets. In other words, the Supreme Court has not laid down any hard and fast rule which is applicable to all cases. Therefore, he resorted to the valuation of shares as per Rule 1D of the Wealth-tax Rules (break-up method) in order to determine the market value of the shares transferred. However, he was aware of the judgment of the Bombay High Court in the case of CWT v. Pratap Bhogilal [1987] 167 ITR 501 wherein it has been held that the provision for tax made by the company should not be reduced by advance tax paid and, therefore, he has withheld the proportionate tax attributable to advance tax paid. Accordingly, he determined the gift as detailed in the Gift-tax assessments. 5. On appeal, the CGT(A) cancelled th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave observed that the yield method is the generally applicable method, while the break-up method is the one resorted to in exceptional circumstances or where the company is ripe for liquidation but nonetheless is one of the methods. The Supreme Court has again considered the proper method of valuation of shares of a private company in the case of Smt. Kusumben D. Mahadevia. The Supreme Court observed that in the case of the company which is a going concern and whose shares are not quoted in the stock exchange, the profit which the company has been making and should be capable of making or in other words the profit earning capacity of the company would ordinarily determine the value of its shares. The break-up value would not be appropriate ..... X X X X Extracts X X X X X X X X Extracts X X X X
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