TMI Blog1979 (11) TMI 11X X X X Extracts X X X X X X X X Extracts X X X X ..... income-tax references are different individuals holding certain shares in a private limited company, viz., the Malayala Manorama Co. Ltd. They have filed returns showing their total wealth for the assessment year 1972-73. The valuation date under the W.T. Act, 1957, was March 31, 1972. The shares of the company had a face value of Rs. 10. In the return, the shares were valued at Rs. 4,025. This was arrived at by following the break-up value method on the basis of the balance-sheet of the company for the relevant year. This was accepted by the WTO who accepted the return under s. 16(1). The assessment was completed on November 30, 1972. The assessee appealed to the AAC. It was argued on their behalf that they had made applications, on July ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [1983] 139 ITR 357 (Mad)] held that the rule in question is not mandatory. The Tribunal, accordingly allowed the assessee's, appeals in part by fixing the value of the shares at Rs. 30 per share. We may notice the relevant section as well as the rule under the W.T. Act:-Section 7 and r. ID read as follows: " 7. Values of assets how to be determined.-(1) Subject to any rules made in this behalf, 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. (2) Notwithstanding anything contained in subsection (1), (a) where the assessee is carrying on a business for which accounts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thing contained in sub-section (1), the value of a house belonging to the assessee and exclusively used by him for residential purposes throughout the period of twelve months immediately preceding the valuation date may, at the option of the assessee, be taken 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 next following the date on which he became the owner of the house, or on the valuation date relevant to the assessment year commencing on the 1st day of April, 1971, whichever valuation date is later: Provided that where more than one house belonging to the assessee is exclusively used by him for residential purposes, the provisions of, this sub-section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accounting year of that company does not end on the valuation date, for not less than three continuous accounting years ending on a date immediately before the valuation date the market value of such share shall be as indicated in the table." (Rest of the rule omitted as unnecessary). The rule has been framed under the powers conferred by s. 46 of the Act which is the rule-framing section. We may quote sub-s. (1) and subs. (2)(a) of s. 46, which are as follows: " 46. Power to make rules. -(1) The Board may, by notification in the Official Gazette, make rules for carrying out the purposes of this Act. (2) In particular, and without prejudice to the generality of the foregoing power, rules made under this section may provide for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x Officer. The Act provided that so long as the rules are not framed, the Wealth-tax Officer shall estimate the price which it would fetch if sold in the open market on the valuation date. After the framing of the rules in 1967, the valuation of unquoted equity shares has to be determined under section 7(1) read with rule I D. Relying on the observation in Commissioner of Income-tax v. McMillan Co. [1958] 33 ITR 182 (SC), counsel for the Revenue has urged that the Tribunal exercises the same powers as are exercised by the Wealth-tax Officer under section 7(1) while valuing an asset. He has urged that the mere use of the word 'in the opinion' does not in any manner indicate that the rule is not binding on the Tribunal. In McMillan Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gard to both conditions, the first and initial duty is that of the Income-tax Officer to determine whether the conditions or any of them are fulfilled, secondly, if the opinion of the Income-tax Officer with regard to the second condition is to be inviolate by reason of the difference in language, then it should be inviolate in all cases. Why should it be inviolate in one case and not so when the assessee appeals against a determination made adverse to him ? We feel that the second condition is expressed in the terms in which it has been expressed, because it involves an inferential process and the expression 'in the opinion of the Income-tax Officer' is aptly used as that officer must in the first instance make the determination. It does n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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