Judgment:
1. This is a reference under Section 27(3) of the Wealth-tax Act, 1957, made at the instance of the Commissioner of Wealth-tax. Rajasthan, Jaipur.
2. The controversy involved in the present case is a very short one and that is about the method of valuation to be applied to the shares which the respondent-assessee had in Krishna Mills Ltd., Beawar. Krishna Mills Ltd. is a private company and is a going concern. In the return submitted for the assessment year 1977-78, before the Wealth-tax Officer, the shares were valued on the basis of yield method. The Wealth-tax Officer did not accept the claim of the assessee and revalued the shares as per Rule 1D of the Wealth-tax Rules, 1957, which means that it was a break-up method. The assessee felt aggrieved by the order of the Wealth-tax Officer and filed an appeal before the Appellate Assistant Commissioner of Income-tax, Ajmer. In appeal, the order of the Wealth-tax Officer was upheld and the appeal was rejected. Against the order of rejection, the assessee preferred a second appeal before the Income-tax Appellate Tribunal, contending that Rule 1D was not mandatory and that the method to be applied for valuing the shares should have been the yield method. The Tribunal upheld the contention of the assessee.
3. Against the judgment of the Tribunal, the Department preferred an application for reference under Section 27(1) of the Act, but, on being rejected, it came to this court under Sub-section (3) of Section 27 of the Act. According to the argument of learned counsel for the Revenue advanced before us, the method for determination of the value of the shares should have been the break-up method and that the shares have been wrongly assessed. On this application, the following question has been referred :
' Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the value of the shares held by the assessee in M/s. Krishna Mills Ltd., Beawar, should be taken on the basis of the yield method ?'
4. We have heard learned counsel for the parties.
5. A number of decisions of the Supreme Court were cited before us. Among those to he mentioned are : CWT v. Mahadeo Jalan : [1972]86ITR621(SC) ; CGT v. Smt Kusumben D. Mahadevia : [1980]122ITR38(SC) and CGT v. Executors and Trustees of the Estate of Late Sh. Ambalal Sarabhai : [1988]170ITR144(SC) . In all these cases, the Supreme Court has taken the view that the method of valuation should have been the yield method and not the break-up method. In a going concern, as it was in the present case, the consistent view of the Supreme Court is that it should be on the basis of dividends received.
6. Consequently, we answer the question against the Revenue and in favour of the assessee and the Registry is directed to send the record to the Tribunal with the aforesaid answer. The assessee would be entitled to get Rs. 600 as costs.