9911796707
TMI Blog1991 (11) TMI 36X X X X Extracts X X X X X X X X Extracts X X X X ..... eals), Nagpur, valuing the unquoted shares of the assessee ? (2) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was correct in holding that gross liability including advance tax was to be deducted while working out the value of shares ? (3) Whether, on the facts and in the circumstances of the case, while working out the value of shares, deduction on account of gross liabilities including advance tax was permissible within the meaning of rule ID of the Wealth-tax Rules, 1957, and the valuation so made by the Tribunal was in accordance with the provisions of law?" The controversy arises about the computation of market value of unquoted equity shares of a company (other than an investment company or a ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax Act, 1961 (43 of 1961) :..... (ii) the following amounts shown as liabilities in the balancesheet shall not be treated as liabilities, namely : -. . . (e) any amount representing provision for taxation (other than the amount referred to in clause (i)(a)) to the extent of the excess over the tax payable with reference to the book profits in accordance with the law applicable thereto . . ." The substance of the matter is whether the expression "tax payable with reference to the book profits in accordance with the law applicable thereto", used in clause (ii)(e) of Explanation II to rule ID means the net tax after deducting the advance tax actually paid and shown on the assets side in the balance-sheet of the company, or the gross tax pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oses of the rule. Clauses (i) and (ii) operate upon two distinct fields and there is no scope for mixing one with the other. There is no controversy about the legal position that the amount representing the advance tax paid and appearing as an asset in the balance-sheet has to be excluded as per clause (i)(a). The dispute pertains to the liability representing the provision for taxation in sub-clause (e) of clause (ii). Scrutiny of that sub-clause would indicate that it merely refers to the amount representing the provision for taxation and not payment. Advance tax paid has no role to play in clause (ii) as the bracketed portion in clause (ii)(e) "other than the amount referred to in clause (i)(a)" indicates. In our view, this is what the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ations based on actuality in interpreting the same. Tax laws are dry and prosaic, having no place for equity or sentiments and have to be strictly construed. There is no room for any intendment or presumption. Nothing is to be read in, nothing is to be implied. One has fairly to look at the plain language used and if it is ambiguous and capable of two constructions, the construction favourable to the subject ought to be adopted. The Gujarat High Court in CWT v. Ashok K. Parikh [1981] 129 ITR 46 had occasion to deal with the controversy first. It accepted the viewpoint put forth on behalf of the assessee and stated (at page 52) : "In our opinion, sub-clause (a) of clause (i) of Explanation II is intended to give a benefit to the (holders o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the Wealth-tax Officer and the Appellate Assistant Commissioner seek to do in the instant case. Sub-clause (e) of clause (ii) and sub-clause (a) of clause (i) of the rule operate in two different fields altogether. Clause (i)(a) operates in the field of actual payment of advance tax. Clause (ii)(e) operates in the field of excess provision for taxation other than the provision for taxation regarding advance tax, and it is in this light that rule ID has to be approached." The aforesaid decision has been followed in the case of CWT v. Pratap Bhogilal [1987] 167 ITR 501 by this court. It analysed clause (ii)(e) thus (at page 504) : "The sub-clause (e) has two main parts: (i) any amount representing provision for taxation (other than the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of the Wealthtax Act, because that would be a futile and unnecessary effort for the Tribunal to undertake, since the answer would have been a foregone conclusion. In situations like this, it should also be deemed that the case was stated to the High Court and, following the earlier decision, the High Court answered the questions in favour of the assessee. Thus, the decision of the Tribunal, under the circumstances, cannot be faulted on any ground. It is true that the controversy has not come to an end with the above Bombay High Court decision. The Madras High Court in L. G. Balakrishnan v. CWT [1988] 173 ITR 266, preferred the views taken by the Gujarat and Bombay High Courts and differed from the views taken by the Punjab and Haryana an ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
