| Case ID |
1725995f-1ee7-4e0d-9935-c8d3ac79687c |
| Body |
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| Case Number |
CWP Nos. 2008 TO 2013 OF 1984 |
| Decision Date |
Aug 28, 1985 |
| Hearing Date |
|
| Decision |
The Delhi High Court ruled that the method of valuation for unquoted equity shares under the Wealth-tax Act must consider the circumstances of each case. The court determined that rule 1D for the valuation of unquoted shares is mandatory only when the valuation dates of the shareholder and the company coincide. If the valuation dates differ, the application of rule 1D becomes directory, allowing the taxpayer to demonstrate an alternative valuation method. The court quashed the order of the Commissioner of Wealth-tax, which had set aside the assessment order determining the value of shares at Rs. 11,76,000, and directed the Commissioner to issue a fresh order considering the observations made in the judgment. |
| Summary |
In the case of Sharbati Devi Jhalani v. Commissioner of Wealth Tax, the Delhi High Court addressed the valuation of unquoted equity shares under the Wealth-tax Act, 1957. The petitioner, Sharbati Devi Jhalani, challenged the assessment order regarding the valuation of her shares in Gedore Tools (I) P. Ltd. The court examined the applicability of rule 1D, which prescribes the break-up value method for valuing unquoted shares. The ruling emphasized that while rule 1D is generally mandatory, its application can be directory when the valuation dates for the taxpayer and the company do not match. The court ultimately quashed the Commissioner’s order and affirmed the need for a fresh assessment order that aligns with the principles established in previous Supreme Court rulings regarding share valuation methodologies. This case underscores the importance of accurate asset valuation in wealth tax assessments and the legal precedent regarding the interpretation of statutory rules. |
| Court |
Delhi High Court
|
| Entities Involved |
Not available
|
| Judges |
Yogeshwar Dayal,
B.N. Kirpal
|
| Lawyers |
Not available
|
| Petitioners |
Sharbati Devi Jhalani
|
| Respondents |
Commissioner of Wealth Tax
|
| Citations |
1986 SLD 1509,
(1986) 159 ITR 549
|
| Other Citations |
CGT v. Kusumben D. Mahadevia [1980] 122 ITR 38,
CWT v. Mahadeo Jalan [1972] 86 ITR 621
|
| Laws Involved |
Wealth-tax Act, 1957
|
| Sections |
25(2),
7,
16A
|