RAMANUJAM J.

The assessee is the same in both the cases. He owned 500 equity shares and 277 preference shares in Best & Co. (Private) Ltd., Madras, of the face value of Rs. 100 each In his wealth-tax return for the assessment year 1961-62, he valued these shares at Rs.77, 700, as per their face value. The Wealth-tax Officer did not accept the said valuation of the shares, but computed the market value of those shares on the basis of the balance-sheet of Messrs. Best and Co. for that year and determined the value at Rs.1, 66, 278

For the assessment year 1962-63, the assessee again valued these shares at Rs.77, 700 on the basis of their face value. The Wealth-tax Officer again did not accept this valuation but computed the market value of the shares on the basis of the balance-sheet of Messrs. Best and Company for that year and determined their value at Rs. 1, 99, 200

The assessee preferred appeals to the Appellate Assistant Commissioner against the orders of the Wealth-tax Officer computing the value of the shares on the basis of the balance-sheets of the company. He contended that, under the articles of association of Messrs. Best and Co., there was restriction on transfer of shares, that the shares could, if at all, be transferred only at their face value and that, therefore, there was no justification on the part of the Wealth-tax Officer to value the shares at a higher value. The Appellate Assistant Commissioner did not accept these contentions and held that under the Wealth-tax Act the value of the shares has to be computed on the basis that there was no restriction on the transfer of the shares and that the shares could be sold in the open market. In that view he affirmed the valuation adopted by the Wealth-tax Officer

There were further appeals to the Appellate Tribunal. Before the Tribunal the assessee filed a copy of the memorandum and articles of association of Best and Company and also a letter dated January 17, 1958, from Messrs. Best and Company in which the company had agreed to arrange for the transfer of 200 shares at the rate of Rs. 100 per share and contended that as there is a restriction on the transfer of the shares and also on the value for which the shares could be sold, the shares held by him should be valued only at their face valueThe Appellate Tribunal accepted the assessee's statement that the shares held by the assessee were transferable only subject to the restrictions mentioned in the articles of association and that the shares, if at all, could be transferred only at their face value. The Tribunal, however, held that under section 7(1) of the Wealth-tax Act, the shares have to be valued on the basis that there were no restrictions on their sales and that the assessee could sell the shares in open market at any price wanted by him and which the purchaser was willing to pay. According to the Tribunal the shares in question have to be valued like any other unquoted shares and that the valuation adopted by the Wealth-tax Officer on the basis of the break-up value given in the balance-sheet was proper and reasonable. At the instance of the assessee the following questions have been referred to this court for its opinion in respect of the two years 1961-62 and 1962-63

"Whether, on the facts and in the circumstances of the case and also in view of the provisions of section 7(1) of the Wealth-tax Act, the valuation of the shares of Best and Co. (Private) Ltd., Madras, held by the assessee at Rs. 1, 66, 278, was proper ?

Whether, on the facts and in the circumstances of the case, and also in view of the provisions of section 7(1) of the Wealth-tax Act the valuation of the shares of Best & Co. (Private) Ltd., Madras, held by the assessee at Rs. 1, 99, 200, was proper ?" *

As already stated, the Tribunal has found that there are restrictions on the transfer of shares and that the price for which they could be transferred has also been pegged down to its face value in the articles of association of Mes