TMI Blog1985 (10) TMI 47X X X X Extracts X X X X X X X X Extracts X X X X ..... taxation in valuing the shares of M/s. International Instruments (P) Ltd.? " In order to appreciate the question, it is necessary in the first instance to notice the facts as found by the Tribunal. The assessee as an individual held equity shares in M/s. International Instruments Pvt. Ltd. For the assessment year 1974-75, the assessee declared in his return under the Wealth-tax Act, 1957 ("the Act"), before the Wealth-tax Officer the value of the equity shares held by him at Rs. 220,24 per share. On January 22, 1977, the Wealth-tax Officer completed the assessment determining the share value at Rs. 315,26 per share and subjected the same to tax under the Act on that basis. Aggrieved by the said order of the Wealth-tax Officer, the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s upon the words " other than the amount referred to in clause (i)(a) " occurring in rule ID of the Rules and the meaning attached to the words " other than " in the law lexicon contended that it refers to the provision for taxation other than the provision for advance tax and they do not mean the amount paid as advance tax under the Income-tax Act. In support of his contention, Mr. Sarangan has strongly relied on Division Bench ruling of the Gujarat High Court in CWT v. Ashok K. Parikh [1981] 129 ITR 46. Rule ID of the Rules that is material reads thus: " ID. The market value of an unquoted equity share of any company, other than an investment company or a managing agency company, shall be determined as follows: The value of all the li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is clear that it deals with liability. Exclusion of advance tax from the total assets under clause (i)(a) is not to be confused with the provision for the total tax payable by the company, which is referred to in clause (ii)(e) as a liability. The advance tax has to be paid during the accounting year of the company. It has already been paid daring the accounting year and all that remains is its adjustment against the total tax due. Advance tax paid is on the assets side of the balance-sheet and that amount is embedded in the full provision for tax which appears on the liabilities side. If the advance tax as an asset is taken out, there has to be a corresponding reduction from the tax liability, which appears as a provision for tax due at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be properly applied in the context of the Rules. In Ashok Kumar Oswal v. CWT [1984] 148 ITR 620, the High Court of Punjab and Haryana had occasion to examine a similar question and expressed thus (at P. 624) : " In sub-clause (e), the words 'the tax payable with reference to the book profits' are important. These words connote the amount of tax due from a company after deducting the advance tax and not the whole of the amount of tax worked out on the book profits. A provision for taxation is made in the balance-sheet under rules of accountancy and not under any rule of law. The liability of a company to pay tax is the amount of tax worked out on its profits minus the payment made as advance tax. It cannot be said that the advanc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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