THIRD SCHEDULE – VALUATION OF ASSETS
1433. Explanation to rule 11 of Third Schedule to the Wealth-tax Act, 1957 – Valuation of assets – Instructions regarding balance-sheet drawn up as on the relevant valuation date but not available to the shareholders on the due date of filing wealth-tax returns
1. Rules 11 and 12 of the Third Schedule to the Wealth-tax Act lay down the manner of computing the value of unquoted equity shares on the basis of the balance-sheet of a company. The Explanation to rule 11 provides that for purposes of this rule, “balance-sheet” in relation to any company will be the balance-sheet of such company as drawn up on the relevant valuation date and where there is no such balance-sheet, the balance-sheet drawn up as on a date immediately preceding the relevant valuation date, and, in the absence of both, the balance-sheet drawn up as on the date immediately after the relevant valuation date. Sub-rule (4) of rule 12 of the said Schedule provides that for purposes of this rule, balance-sheet has the same meaning as in rule 11.
2. Representations have been received that, in a number of cases, balance-sheet drawn up as on the relevant valuation date is not published before the due date of filing wealth-tax return by shareholders and hence not available to them on such date. A view may be taken that since in such cases, it cannot be said that the balance-sheet is not drawn up on the relevant valuation date, it will not be permissible to work out the value under rules 11 and 12 on the basis of the balance-sheet drawn up as on a date immediately preceding the relevant valuation date. This may result in hardship to the taxpayers.
3. The Board have decided that where the balance-sheet of a company drawn up as on the relevant valuation date is not published before the due date of filing wealth-tax return by the shareholders and hence not available to them on the said date, they may work out the value of unquoted equity shares under aforesaid rules 11 and 12 on the basis of the balance-sheet drawn up as on a date immediately preceding the relevant valuation date.
4. In cases where the returns have been filed adopting the value of unquoted equity shares in accordance with para 3 above, the Wealth-tax Officers while making assessment will work out the value on the basis of the balance-sheet drawn up as on a date immediately preceding the relevant valuation date notwithstanding the fact that the balance-sheet drawn up as on the relevant valuation date is available at the time of making assessment.
Circular: No. 548, dated 27-10-1989
