COMMISSIONER OF WEALTH TAX vs. CHIMANBHAI S PTEL(HUF)

PDF · subscribers
WTR/12/1993HC GujaratGJHC24021488199327 January 1998Bench: HONOURABLE MR. JUSTICE R.K.ABICHANDANI,HONOURABLE MR. JUSTICE ANIL R. DAVE2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court answered all three referred questions in the negative, in favour of the Revenue and against the assessee. The reasoning was based on the Supreme Court's decision in Bharat Hari Singhania, reported in 207 ITR page 1. This decision held that Rule 1D of the Wealth Tax Rules must be followed in all cases where unquoted equity shares of a company (other than an investment or managing agency company) are to be valued, and that all authorities under the Act are bound by this rule, which was found to be exhaustive on the subject. Consequently, the Tribunal's findings on the valuation method and the specific value per share were overturned in light of the mandatory application of Rule 1D.

What were the facts?

This case involves a Wealth Tax Reference made by the Income Tax Appellate Tribunal (ITAT), Ahmedabad, to the High Court of Gujarat. The reference concerns the valuation of shares of M/s. Sandesh Ltd. for wealth tax purposes. The assessee is Chimanbhai S. Patel (HUF), and the revenue is the Commissioner of Wealth Tax. The specific assessment year(s) are not explicitly stated in the provided text. The core of the dispute revolves around the method and value used for determining the wealth tax liability on the shares held by the assessee.

What were the issues?

The High Court was asked to decide three questions of law referred by the ITAT: 1. Whether the Appellate Tribunal was correct in holding that the shares of M/s. Sandesh Ltd. should be valued at Rs. 150/- per share? 2. Whether the Appellate Tribunal was correct in holding that the proper method for valuing the shares of the company was the maintainable profit method? 3. Whether the Appellate Tribunal was correct in holding that the proper method for valuing the shares of a going concern is the yield basis method? The judgment does not explicitly detail the arguments made by the assessee or the revenue for each question. However, it notes that the Tribunal proceeded on the footing that the yield basis method was the proper method for valuing shares of a going concern.

Which sections of the Income-tax Act were involved?

Section 27(1)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

WEALTH TAX REFERENCE No 12 of 1993

For Approval and Signature:

Hon'ble MR.JUSTICE R.K.ABICHANDANI and MR.JUSTICE A.R.DAVE ============================================================ 1. Whether Reporters of Local Papers may be allowed to see the judgements?

2.

To be referred to the Reporter or not?

3.

Whether Their Lordships wish to see the fair copy of the judgement?

4.

Whether this case involves a substantial question of law as to the interpretation of the Constitution of India, 1950 of any Order made thereunder?

5.

Whether it is to be circulated to the Civil Judge?

-------------------------------------------------------------- COMMISSIONER OF WEALTH TAX Versus CHIMANBHAI S PTEL(HUF) -------------------------------------------------------------- Appearance: MR MANISH R BHATT for Petitioner Respondent served

--------------------------------------------------------------

CORAM : MR.JUSTICE R.K.ABICHANDANI and MR.JUSTICE A.R.DAVE Date of decision: 27/01/98

ORAL JUDGEMENT (Per R.K.Abichandani,J.)

The Income Tax Appellate Tribunal, Ahmedabad has referred the following three questions for our opinion under Section 27(1) of the Wealth Tax Act, 1957:-

1.

"Whether, the Appellate Tribunal is right in law and on facts in holding that the shares of M/s.

Sandesh Ltd., should have been valued at Rs. 150/- per share?"

2.

"Whether, the appellate Tribunal is right in law and on facts of the case in holding that the proper method for valuing the shares of the company was maintainable profit method?"

3.

"Whether, the Appellate Tribunal is right in law and on facts of the case in holding that the proper method for valuing the shares of a going concern is the yield basis method?"

The Tribunal proceeded on the footing that the proper method for valuing the shares of a going concern is the yield basis method.

The Hon'ble Supreme Court in Bharat Hari Singhania, reported in 207 ITR page 1, has while construing the provisions of Rule 1D of the Wealth Tax Rules, held that Rule 1D has to be followed in every case where unquoted equity shares of a company (other than an investment company or a managing agency company) have to be valued and all the authorities under the Act are bound by the said Rule. It was held that Rule 1D was exhaustive on the subject.

In view of this decision, the aforesaid questions referred to us are answered in the negative in favour of the Revenue and against the assessee. The reference stands disposed of accordingly with no order as to costs.

*/Mohandas

More judgments on Section 27(1)

All 322 judgments and leading authorities on Section 27(1) →

Recent GST High Court judgments

Search GST case law →