1. These five appeals relating to the assessment years 1973-74 to 1977-78, filed by the revenue against the consolidated order of the AAC, Bombay, deal with the same issue and are, therefore, for the sake of convenience, disposed of by a common order.
2. The grievance in these appeals is against the direction of the AAC that in working out the value of unquoted equity shares of companies under rule ID of the Wealth-tax Rules, 1957 advance tax should not be deducted from the tax payable with reference to the book profits in accordance with the law applicable thereto ('the tax payable') for the purpose of determining whether and, if so, to what extent the amount representing provision for taxation was in excess and was, consequently, not to be treated as a liability.
3. The learned departmental representative, Shri Subramanian, cited before us three rulings, one of the Hon'ble Punjab and Haryana High Court in the case of Ashok Kumar Oswal(Minor) v. CWT [1984] 148 ITR 620, another of the Hon'ble Madras High Court in the case of T.V.Srinivasan v. CWT [1985] 152 ITR 599 and the third one of the Hon'ble Karnataka High Court in the case of CWT v. N. Krishnan [1986] 24 Taxman 269, wherein their Lordships dissented from the ruling of the Hon'ble Gujarat High Court in the case of CWT v. Ashok K. Parikh [1981] 129 ITR 46 and laid down that advance payment of tax should be deducted from the tax payable for the purpose of determining whether and, if so, to what extent the amount representing provision for taxation was in excess and was, consequently, not to be treated as a liability in determining the value of unquoted equity shares of companies other than investment companies and managing agency companies under Rule 1D. This formed the basis of the submissions of the learned departmental representative, Shri Subramanian, that we should follow these later three rulings in preference to the ruling of the Hon'ble Gujarat High Court and reverse the order of the AAC on this issue.
4. On the other hand, the assessee's learned counsel, Shri Trivedi, while not disputing that in view of the subsequent three rulings now cited by the learned departmental representative, Shri Subramanian, the various Benches of the Tribunal were now not following the ruling of the Hon'ble Gujarat High Court and instead following these three rulings, pointed out to us that for the assessment years 1973-74 to 1976-77 in the grounds of appeal before the AAC the assessee had also challenged the reopening of the assessment under Section 17 of the Wealth-tax Act, 1957 which had not been considered by the AAC in his order. Reference was made by him to Rule 27 of the Income-tax (Appellate Tribunal) Rules, 1963 wherein it was laid down that the respondent, though he may not have appealed, may support the order appealed against on any of the grounds decided against him. Elaborating on his arguments, Shri Trivedi submitted that since the challenge to the reopening of the reassessment for the assessment years 1973-74 to 1976-77 was not considered or adjudicated upon by the AAC in his order, it should be deemed that this ground was decided against the assessee and on this basis it should be held that since the reopening of the assessment itself was bad for the assessment years 1973-74 to 1976-77, the additions made in the reopened assessment orders could not be sustained.
5. The learned departmental representative, Shri Subramanian, in reply pointed out that if the challenge to the reopening of the assessments for the assessment years 1973-74 to 1976-77 was not considered or adjudicated upon by the A AC, it could be either because the grounds of appeal in this connection were not pressed by the assessee at the time of hearing before the AAC or the AAC had forgotten to adjudicate on this issue through oversight and in either case there could be no presumption that there was a decision on this issue and the decision was against the assessee. He, therefore, submitted that at the most a direction could be given to the AAC to verify whether ground Nos. 1 and 2 of the memorandum of appeal for the assessment years 1973-74 to 1976-77 were not pressed or withdrawn at the time of hearing and, if that is not so, to deal with these grounds of appeal now.
6. We have carefully considered the rival submissions. With very great respect to the ruling of the Hon'ble Gujarat High Court in the case of Ashok K. Parikh (supra), we are inclined to follow the three subsequent rulings of the Hon'ble Punjab and Haryana High Court, the Hon'ble Madras High Court and the Hon'ble Karnataka High Court in the cases of Ashok Kumar Oswal (supra), T. V. Srinivasan (supra) and N. Krishnan (supra) wherein their Lordships, after considering the ruling of the Hon'ble Gujarat High Court in the case of Ashok K. Parikh (supra), came to a contrary view. We, therefore, hold that advance payment of tax ought to have been deducted from the tax payable in order to determine whether and, if so, to what extent the amount representing provision for taxation was in excess and was, consequently, not to be treated as a liability in working out the value of unquoted equity shares of companies under rule ID. On this issue, therefore, the order of the AAC does not appear to be correct and is reversed, while the order of the WTO is restored.
7. We agree with the learned departmental respresentative, Shri Subramanian, that by the mere fact of the AAC having not considered ground Nos. 1 and 2 of the memorandum of appeal for the assessment years 1973-74 to 1976-77, it cannot be inferred that these grounds of appeal were decided against the assessee. We, therefore, direct the AAC to verify whether these grounds of appeal raised in the memorandum of appeal for the assessment years 1973-74 to 1976-77 were not expressly withdrawn or not pressed or given up at the time of hearing and, if that is not so, to deal with these grounds of appeal on merits and in accordance with law after giving to the assessee a reasonable opportunity of being heard by a supplementary order.
8. The appeal for the assessment year 1977-78 is allowed, while the appeals for the assessment years 1973-74 to 1976-77 are partly allowed.