A. K. MATHUR, C. J. :
All the cases mentioned in the appendices to this judgment involve similar questions of law. Therefore, these references are answered by a common judgment.
2. There are two batches of references : in the first batch, references have been called by this Court under s. 27(3) of the WT Act in respect of cases mentioned in Appendix A to the judgment and the following question of law has been referred by the Tribunal for answer by this Court :
'Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in cancelling the CWTs order under s. 25(2) of the WT Act, particularly when the order passed by the WTO was not keeping with Expln. II(ii)(f) of r. 1D of WT Rules for evaluating the break up value of the shares held by the assessee in M/s Delhi Tambaku Udyog (P) Ltd. on the evaluation date ?'
3. In the second batch, references have been made by the Tribunal under s. 27(1) of the Act in respect of cases mentioned in Appendix B to this judgment in which the following question of law has been referred for answer by this Court :
'Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the liabilities under the Bidi Cigar Workers (Conditions of Employment) Act, 1966, and provisions of Provident Fund Scheme, 1952 are statutory liabilities and are allowable deductions to arrive at the value of unquoted shares as per r. ID of the WT Rules ?'
4. For convenient disposal of all these references, the facts given in WT Ref. No. 20 of 1994 are taken into consideration.
5. In respect of assessment year in question, one of the assets which was brought to assessment was the shares of M/s. Delhi Tambaku Udyog (P) Ltd. which were not quoted at the Stock Exchange and, therefore, their value was worked out by the WTO by applying r. 1D of the WT Rules, 1957, (for short, the Rules). The WTO, while working out valuation of the said shares, held that the liabilities under s. 29 of the Bidi and Cigar Workers (Conditions of Employment) Act, 1966 (for short, the Act of 1966), were contingent and hence were not deductible. He also observed that the Department had not accepted the decision of the Madhya Pradesh High Court in the case of Kale Khan Mohd. Hanif vs. CIT (1981) 25 CTR (MP) 120. He, therefore, valued the shares himself without deducting what he called the contingent liability under s. 29 of the Act of 1966. On appeal, the AAC followed the said judgment of the Madhya Pradesh High Court in the aforesaid case of Kale Khan Mohd. Hanif and directed to value the said shares after deducting the liabilities under the Act. Revenue approached the Tribunal against the order of the assessee and the Tribunal also rejected the submission of the Revenue and held that the liability in question was not contingent liability, but ascertained liability. Hence the present reference has been made.
6. It may be relevant to mention here that similar matter came up before the Tribunal, Delhi in relation to asst. yr. 1975-76 and in that, it was contended before the Tribunal that a provision for Rs. 38,56,615.00 for liabilities under the Act of 1966 was made in the books of Delhi Tambaku Udyog (P) Ltd. Delhi, and the AO allowed the provision of Rs. 10,00,303.00 which was for liabilities for asst. yr. 1975-76. He disallowed the other provisions on the ground that these provisions should have been made in the year concerned, as for the asst. yr. 1973-74, provision of Rs. 13,53,148.00 and for the asst. yr. 1974-75, provision of Rs. 14,34,272.00, totalling Rs. 27,87,425.00, the Tribunal at Delhi allowed provision of Rs. 22,88,905.00 and for remaining Rs. 4,98,520.00, the Tribunal Delhi, remanded the case for further enquiry. On remand, the AO rejected the provision for Rs. 4,98,520.00, but the CIT(A) allowed the same. Thus the full provision of Rs. 38,56,615.00 was allowed and it was deducted as a liability from the assets of the company for valuation of its shares.
Against this order, a reference was made before the Delhi High Court and that reference is pending for answer there. [Ref. No. 811 Del 76-77].
7. Therefore, in order to work out the shares of the partners of the firm, the question is whether the provision for this statutory liability is to be deducted or not. This question is already pending before the Delhi High Court (Ref. No. 811 Del. 76-77) and it will depend on the answer of the Delhi High Court. If the answer is given in favour of the assessee, then in order to work out the value of each shareholder, proportionate deduction has to be made in the share value. If the answer is against the assessee, then the deduction of Rs. 38,58,615.00 will not be allowed in the share value of this company and accordingly the share value of each of the shareholders shall be valued. Hence the whole case depends upon the disposal of the reference which is pending before the Delhi High Court. Though the Tribunal, Jabalpur Bench has answered all these cases on the basis of the decision in Kale Khan Hanif Mohd. (supra) of the High Court of Madhya Pradesh, yet the question is whether the deduction claimed by the assessee-company towards the statutory liability is permissible or not for the assessment year under challenge in the reference pending before Delhi High Court. If the reference is allowed, then the share value has to be accordingly assessed and if it is not permitted, the share value is to be assessed in the light of that decision. Therefore, it is not possible to answer the question raised in these cases till the reference pending in the Delhi High Court is answered.
8. Hence, we answer these questions in terms that the value of the shares held by the assessee-company [sic -shares held by the assessee in] M/s. Delhi Tambaku Udyog (P) Ltd. shall be determined on the basis of the answer given by the Delhi High Court in the aforesaid references made at the instance of the Revenue. The share value of each of the shareholder shall be determined in the light of the answer given by the Delhi High Court in reference cases pending before the Delhi High Court. Accordingly we answer both these questions.
9. In MCC Nos. 462/88, 682/88, 464/88 and 465/88 (Appendix C) another question has been referred which reads as under :
'1. ... ....
2. Whether the Tribunal was justified in holding that a partner is entitled to exemption under s. 5(1)(iv) in proportion to his share in the firm in which he is a partner when the relevant property is a partnership asset ?'
10. So far as the second question is concerned, it stands decided by this Court in Narsibhai Patel vs . CWT : [1981]127ITR633(MP) and Jagdish Chandra Grover vs . CWT : [1985]156ITR560(MP) . For reasons mentioned in the above cases, the question is answered in favour of the assessee and against the Revenue.
11. Therefore, for the reasons mentioned in the aforesaid cases, the second question in the aforesaid 4 cases is answered in favour of the assessee and against the Revenue.
Appendix A
S. No.
W. T. Ref. No.
Names of parties
1.
20/94
CWT vs. Deepam Kumar Patel
2.
21/94
CWT vs. Madhuker Rao Pimpalapure
3.
22/94
CWT vs. Sanjay Kumar Patel
4.
23/94
CWT vs. Neeraj Kumar Patel
5.
24/94
CWT vs. Kumud Ben Patel
6.
25/94
CWT vs. Narendra Kumar Patel
7.
26/94
CWT vs. Baburao Pimpalapure
8.
27/94
CWT vs. Chandra Shekhar Pimpalapure
9.
28/94
CWT vs. Gopalrao Pimpalapure
10.
29/94
CWT vs. Madhuker Rao Pimpalapure
11.
30/94
CWT vs. Lekha Pimpalapure
12.
31/94
CWT vs. Smt. Meena Pimpalapure
Appendix B
S. No.
M. C. C. No.
Names of parties
1.
683/88
CWT vs Ku. Nita Pimpalapure
2.
684/88
CWT vs. Samir Kumar Patel
3.
685/88
CWT vs. Samir Kumar Patel (L. R. of Narendra Kumar Patel)
4.
686/88
CWT vs. Samir Kumar Narendra Kumar Patel
5.
687/88
CWT vs. Ku. Dipti Ben Patel
6.
688/88
CWT vs. Ku. Dipti Pimpalapure
7.
689/88
CWT vs. Ku. Piyusha Pimpalapure
8.
690/88
CWT vs. Smt. Sudhaben Patel
9.
691/88
CWT vs. Smt. Meena Pimpalapure
10.
692/88
CWT vs. Ku. Varshaben Patel
11.
693/88
CWT vs. Smt. Savitribai Pimpalapure
12.
694/88
CWT vs. Shri Nilima Pimpalapure
13.
695/88
CWT vs. Shri Arun Pimpalapure
14.
696/88
CWT vs. Shri Ajay Pimpalapure
15.
697/88
CWT vs. Shri Sanjay Kumar Patel
16.
698/88
CWT vs. Chandra Shekhar Pimpalapure
17.
699/88
CWT vs. Niraj Kumar Patel
18.
700/88
CWT vs. Shri Deepam Kumar Patel
19.
701/88
CWT vs. Baburao Pimpalapure
20.
702/88
CWT vs. Gopal Rao Pimpalapure
21.
703/88
CWT vs. Madhuker Rao Pimpalapure
22.
704/88
CWT vs. Lekha Pimpalapure
Appendix C
S. No.
M. C. C. No.
Names of parties
1.
462/88
CWT vs. Smt. Lekha Pimpalapure
2.
464/88
CWT vs. Devendra Kumar Patel
3.
465/88
CWT vs. Smt. Kumud Ben Patel
4.
682/88
CWT vs. Smt. Kumud Ben Patel