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TMI Blog1984 (2) TMI 144X X X X Extracts X X X X X X X X Extracts X X X X ..... in accordance with the provision of r. 1D of the Wealth Tax Rules. 2. The assessee held shares of Madhu Jayanti Pvt. Ltd. and Jay Bharat Cotton Textiles Pvt. Ltd. According to the assessee, the shares were to be valued on the basis of the principle laid down by the Supreme Court in the case of CWT vs. Mahadeo Jalan & Ors. 1972 CTR (SC) 257 : (1972) 86 ITR 621 (SC), so also on the basis of the decision of the Bombay High Court in the case of Smt. Kusumben D. Mahadevia vs. N.C. Upadhya & Anr. (1980) 14 CTR (Bom) 20 : (1980) 124 ITR 799 (Bom). The WTO rejected the assessee's submission inasmuch as he was of the opinion that the valuation of unquoted shares was to be made keeping in view the provisions of r. 1D of the WT Rules. 3. On appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case of Biju Patnaik vs. WTO in W.T.A. Nos. 614 or 624 and 703 to 717/Del/79, wherein it was held that r. 1BB of the WT Rules is mandatory. The ld. departmental representative urged that the Hon'ble Supreme Court had no occasion to consider the provisions of r. 1BB while deciding the case of Mahadeo Jalan & Ors. He, therefore, urged that the AAC was entirely wrong in applying the principle laid down by the Supreme Court in the case of Mahadeo Jalan & Ors. while determining the value of the shares held by the assessee. The ld. Counsel for the assessee, on the other hand, strongly supported the order of the AAC. He relied on the decisions reported in 1972 CTR (SC) 257 : (1972) 86 ITR 621 (SC), CIT vs. Swadeshi Mining & Manufacturing Co. Lt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pose." 5. Having heard the submissions of both the parties and after going through the facts of the case we are of the opinion that the order of the AAC needs no interference. The Supreme Court in the case of Mahadeo Jalan & Ors. held: "The factors which are likely to determine the value of a share on any particular day or at any particular time are: (i) the profit-earning capacity of the company on a reasonable commercial basis; (ii) its capacity to maintain these profits or a reasonable return for the capital invested, and in special cases such as investment companies, the asset backing, (iii) the prospects of capitalisation of its earning in the shape of declaration of bonus shares or where the company is financially and commercially ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the value of the shares held by the assessee keeping in view the principle laid down by the Supreme Court in the case of Mahadeo Jalan & Ors. 6. Much reliance was placed by the ld. departmental representative on the provisions of r. 1D of the WT Rules, 1957. In this connection, reference may be made to the decision of the Bombay High Court in the case of Smt. Kusumben D. Mahadevia vs. N.C. Upadhya (1980) 14 CTR (Bom) 20 : (1980) 124 ITR 799 (Bom) wherein it has been held that r. 1D of the WT Rules, 1957 prescribing the beak-up method for valuing unquoted equity shares is directory, and not and not mandatory. The observation of the ld. author, Sampath Iyengar, as reproduced herein before, cannot be lost sight of. As has been observed by hi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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