AJIT K. SENGUPTA, J.

( 1 ) AT the instance of the Controller of Estate Duty, West Bengal, the following question of law has been referred to this court under Section 64 (1) of the Estate Duty Act, 1953 :" Whether, on the facts and circumstances of the case, the method of valuation prescribed under Rule 1d of the Wealth-tax Rules, 1957, is to be applied for valuation of unquoted shares held by the deceased for the purpose of estate duty ?"

( 2 ) THE facts leading to this reference are that one Sk. Md. Naqui died on or about August 27, 1969. The deceased, at the time of death, held shares of M/s. Detinners Pvt. Ltd. , M/s. Metale Products Pvt. Ltd. and M/s. Bengal Cold Storage Pvt. Ltd. These were unquoted shares. The Assistant Controller, while valuating these shares on the break-up method had taken into account the value of the goodwill of these companies though not shown in the balance-sheets of the companies concerned. In this way, he valued the shares of (1) M/s. Detinners Pvt. Ltd. at Rs. 4,732 per share (2) M/s. Metale Products Pvt. Ltd. at Rs. 259. 20 per share and (3) M/s. Bengal Cold Storage Pvt. Ltd. at Rs. 73. 60 per share.

( 3 ) AGGRIEVED by the said action of the Assistant Controller, the assessee brought the matter by way of appeal before the Appellate Controller. On the strength of the decision of the Mysore High Court in CED v. J. Krishna Murthy [19741 96 ITR 87, the Appellate Controller held that there was no case for the Assistant Controller to add the value of the goodwill of the companies concerned to their respective assets to determine the value of each of these shares on break-up value method. He further held that Rule 1d of the Wealth-tax Rules, 1957, constitutes a sound basis for the valuation of unquoted shares in estate duty proceedings. He, accordingly, on the strength of the said Rule 1d, valued the said shares on the date of the death of the deceased at Rs. 2,354 per share in the case of M/s. Detinners Pvt. Ltd. , Rs. 162 per share in the case of M/s. Metale Products Pvt. Ltd. and Rs. 55. 29 per share in the case of M/s. Bengal Cold Storage Pvt. Ltd.

( 4 ) THE Departmental Representative, on the strength of the decision of the Calcutta High Court in Controller of Estate Duty v. Biswanath Rungta [1968] 67 ITR 748 urged before the Tribunal that the Appellate Controller had erred in valuing the aforesaid shares by holding that the goodwill should not be added while valuing the shares of the three companies in question on break-up value method.

( 5 ) LEARNED counsel for the accountable person had relied on the order of the Appellate Controller on this point. The Tribunal gave consideration to the above arguments of the parties and upheld the order of the Appellate Controller of Estate Duty by observing as under :" It is an admitted position that these shares in question are not quoted in the stock exchange. Under Section 36 of the Estate Duty Act, 1953, the principal value of these shares has to be estimated to be the price which, in the opinion of the Controller, it would fetch if sold in the open market at the time of the deceased's death. No rules are made under the 1953 Act, prescribing the manner in which the value of unquoted shares may be determined for the purpose of estate duty. As laid down by the Mysore High Court in the case of CED v. J. Krishna Murthy [1974] 96 ITR 87, which has been followed by the Appellate Controller in the absence of rules under the 1953 Act, valuation for purposes of the Act has to be made in accordance with well-recognised methods of valuation followed in India. This position has been accepted by the Assistant Controller because he has valued the shares in question on break-up value method. As such, and as held by the Mysore High Court in the aforesaid decision, the method of valuation prescribed by Rule 1d of the Wealth-tax Rules, 1957, being the only statutorily recognised method of valuation of unquoted equity shares in this country, it would not be wrong to a

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