| Case ID |
67cb6ce4-60e1-4d27-b2dc-5c5082ed6653 |
| Body |
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| Case Number |
WT REFERENCE No. 4 OF 1967 |
| Decision Date |
Jul 12, 1977 |
| Hearing Date |
Jul 11, 1977 |
| Decision |
The Tribunal was right in accepting the valuation of shares at their face value due to the inability of the company to remit profits from Pakistan to India, which effectively rendered the declared dividends as non-existent for the assessees. The decision reaffirmed that the break-up value method should not be indiscriminately applied, particularly when a company is not in liquidation. Furthermore, the conditional nature of the declared dividends, subject to remittances being allowed, meant that these dividends could not be counted as debts owed to the assessees. The case highlights the importance of considering the actual economic realities faced by shareholders in determining the value of shares for wealth tax purposes. |
| Summary |
This case revolves around the valuation of shares held by the assessee, Bhogilal H. Patel, in a company that primarily operated in East Pakistan during the late 1950s. Due to governmental restrictions on remittances from Pakistan to India, the company was unable to pay dividends to its shareholders, including the assessees. The Wealth-tax Officer initially valued the shares using the break-up value method, which was contested by the assessees. The Appellate Assistant Commissioner upheld the face value of the shares, considering the economic realities of the situation, leading to the Tribunal's agreement. The case emphasizes the relevance of actual yield and market conditions when determining asset values for tax purposes. Key terms include wealth tax, valuation of assets, uncashed dividends, and economic restrictions. |
| Court |
Bombay High Court
|
| Entities Involved |
Not available
|
| Judges |
Kantawala, C.J.,
Tulzapurkar, J.
|
| Lawyers |
R.J. Joshi,
V.J. Pandit,
R.J. Kolah,
D.H. Dwarkadas
|
| Petitioners |
Commissioner of Wealth Tax
|
| Respondents |
Bhogilal H. Patel
|
| Citations |
1978 SLD 468 = (1978) 112 ITR 910
|
| Other Citations |
CWT v. Mrs. Leena Mukherjee [1976] 104 ITR 111 (Cal.),
CWT v. Mahadeo Jalan [1972] 86 ITR 621 (SC),
CWT v. P.N. Sikand [1977] 107 ITR 922 (SC),
Narendra Lal v. CIT [1974] 93 ITR 534 (AP)(FB),
Purshottamdas Thakurdas v. CIT [1958] 34 ITR 204 (Bom.),
Ramesh R. Saraiya v. CIT [1965] 55 ITR 699 (SC),
Musst. Jhimi Bajoria v. CIT [1971] 80 ITR 273 (Cal.)
|
| Laws Involved |
Wealth-tax Act, 1957
|
| Sections |
7,
2(m)
|