TMI Blog1967 (12) TMI 5X X X X Extracts X X X X X X X X Extracts X X X X ..... ase, the Tribunal was justified in law to follow the method involving the principle of ' break-up ' instead of the method involving the principle of ' yield value ' in determining the value of the shares in question under section 7 of the Wealth-tax Act ? " Section 7 of the Wealth-tax Act as it stood on the date when the question came to be considered which arises for decision in this case, was as follows : " 7. Value of assets how to be determined.- (1) The value of any asset, other than cash, for the purposes of this Act, shall be estimated to be the price which in the opinion of the Wealth-tax Officer it would fetch if sold in the open market on the valuation date. " It is unnecessary to refer to the remaining portion of the secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpanies, the dividend declared would be controlled by persons controlling the companies so as to suit their own purpose, and as such, the maintainable profits rather than the dividends declared, would afford a reasonable basis. We need not notice this point further, since the objection before us is only of principle, about the adoption of the ' break-up value ', method. Even in the case cited by the learned counsel, the Tribunal has categorically held that the ' break-up value ' was undoubtedly one of the recognised methods of valuation of shares of private companies. For the purpose of the present appeal we hold that the adoption of the ' break-up value ' was in order. " It is not disputed that " break-up value " is also one of the meth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge 74, paragraph 150, in support of the proposition that the more appropriate method is to arrive at the value of the share as obtained in the market and not when the business is about to be disposed of : " A price based on the net value of the company's assets is appropriate where the company has disposed of its business and is in effect in course of winding up; where a purchaser of the shareholding would be in a position to put the company into voluntary liquidation. " We are satisfied that the expression " break-up " is inextricably connected with the situation where the company has reached the stage of winding-up, and that expression cannot be applied to a company, which is a going concern and there is nothing ostensibly wrong with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company the dividend would be controlled by the persons controlling the company to suit their own purposes, and that, consequently, the " maintainable profits " should be accepted as the basis and not the dividends. Unless there was some substantial material before the Tribunal to draw a different inference, the Tribunal, in our opinion, is not justified in doing so. We are constrained to note that, although the Tribunal had adopted the " yield value " method in its decisions in regard to the previous years, the Tribunal had taken a new path and adopted the " break-up value " method as the basis of the assessment. We feel that there is no material placed on the record to justify this change in the method to be adopted in calculation. W ..... X X X X Extracts X X X X X X X X Extracts X X X X
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