| Case ID |
145f0a14-d1e3-4f57-8284-fd5ddf5adcdc |
| Body |
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| Case Number |
D.B.W.T. Reference Application No.45 of 1990 |
| Decision Date |
Apr 28, 1992 |
| Hearing Date |
|
| Decision |
The case revolves around the method of valuation applied to the shares held by the respondent in Krishna Mills Ltd., a private company and going concern. The Wealth-tax Officer initially valued the shares using the break-up method, which the assessee contested, advocating for the yield method instead. The Appellate Assistant Commissioner upheld the officer's decision, but the Income-tax Appellate Tribunal reversed this ruling, asserting that the yield method should be applied. The Revenue's application for reference questioned the Tribunal's decision, but ultimately, the court sided with the assessee, affirming the yield method as the appropriate valuation approach for shares in a going concern, supported by precedent from the Supreme Court. |
| Summary |
This case is pivotal in understanding the valuation of shares under the Wealth Tax Act, 1957, specifically focusing on the yield method versus the break-up method. The Rajasthan High Court addressed the valuation method for shares in Krishna Mills Ltd., emphasizing that in the case of a going concern, the yield method is appropriate as it reflects the actual value derived from dividends. The decision aligns with established precedent from several Supreme Court cases, reinforcing the principle that the yield method should be favored in similar contexts. This ruling is significant for tax practitioners and businesses alike, guiding future assessments of share valuations in wealth tax contexts, and highlighting the importance of judicial interpretation in tax law. |
| Court |
Rajasthan High Court
|
| Entities Involved |
Krishna Mills Ltd.
|
| Judges |
K.C AGRAWAL, C.J.,
I.S. ISRANI, J
|
| Lawyers |
|
| Petitioners |
COMMISSIONER OF WEALTH TAX
|
| Respondents |
SETH GOKULDAS PRADEEP KUMAR RATHI
|
| Citations |
1994 SLD 354,
1994 PTD 293,
(1993) 202 ITR 1010
|
| Other Citations |
CWT v. Mahadeo Jalan (1972) 86 ITR 621 (SC),
CGT v. Kusumben D. Mahadevia (1980) 122 ITR 38 (SC),
CGT v. Executors and Trustees of the Estate of Late Sh. Ambalal Sarabhai (1988) 170 ITR 144 (SC)
|
| Laws Involved |
Wealth Tax Act, 1957,
Wealth Tax Rules, 1957
|
| Sections |
27(3),
1D
|