COMMISSIONER OF WEALTH TAX vs RAJA BALDEODAS BIRLA SANTATIKOSH.

AJIT K. SENGUPTA, J. :

In this reference under s. 27(1) of the WT Act, 1957 the following two question have been referred to this Court for the asst. yr. 1987-88 :

"(1) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the value of the shares gifted by the assessee trust to Birla Jankalyan Trust and subsequently the Birla Jankalyan Trust to Birla Janhit Trust, Birla Seva Trust and Calcutta Medical Research Institute, should not be included in the Net Wealth of the assessee even though the assessee trust had no power to alienate its assets ?

(2) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the unquoted shares of non-investment companies should be valued on net maintainable profit method and not on break-up value method in accordance with the provisions of r. 1D of the WT Rules, 1957 ?"

So far as the first question is concerned admittedly it is concluded by the decision of this Court in the case of this assessee in IT Ref. No. 313A of 1980 and IT Ref. No. 37 of 1984 Raja Baldeodas Birla Santatikosh Vs. Commissioner of Income Tax, where the judgment was delivered on 29th June, 1990. Following the said decision we answer the first question in the affirmative and in favour of the assessee.

So far as the second question is concerned it appears from the order of the WTO that he has not applied the provisions of r. 1D to value the share of M/s. Jaipur Finance & Dairy Products Pvt. Ltd. which is admittedly an investment company. Rule 1D will have no application in the case of an investment company. The Tribunal affirmed the order of the CWT(A) where he directed that in making the valuation on net maintainable average profit method a deduction @ 10% of pre-taxed profit should be allowed. It was further directed to take the rate of capitalisation @ 15% p.a.

The questions raised by the Revenue on these issues being question Nos. 5 and 6 in the reference application under s. 27(1) have been rejected by the Tribunal. Thereafter, no application under 27(3) of the Act was made. In that view of the matter, the second question which has been referred to this Court does not arise out of the order of the Tribunal. We, therefore, decline to answer the second question.

There will be no order as to costs.

SHYAMAL KUMAR SEN, J. :

I agree.