The provision for taxation made on the book profits of the company should be treated as liabilities. If there is any excess in the amount shown by way of provision for taxes over what would be payable with reference to the book profits, only that excess amount cannot be treated as liabilities of the company.

Rajendra Nath Mittal, J.

1. This wealth-tax reference has been made under Section 27(1) of the W.T. Act, 1957, at the instance of the assessee by the Wealth-tax Appellate Tribunal, Amritsar Bench, Amritsar.

2. Briefly, the facts are that the assessee filed his return of net wealth for the assessment year 1968-69 on September 16, 1968, showing a net wealth of Rs. 2,27,537. He owned 4,000 equity shares of M/s. Oswal Woollen Mills Ltd. which were unquoted. In the return, the value of the shares was shown by the assessee as Rs. 83,200 at the rate of Rs. 20.80 per share. The Wealth-tax Officer (hereinafter referred to as "the WTO") while examining the balance-sheet of M/s. Oswal Woollen Mills Ltd. found that the assessee had not properly valued the shares of the company. He determined the break-up value of the shares at Rs. 61.03 per share and adopted 82% of the break-up value of the shares as the market value on the valuation date. On that basis he worked out the value of the shares at Rs. 50.04 per share. Consequently, he determined the total value of the shares at Rs. 2,00,160.

3. After the completion of the assessment, the assessee made an application under Section 35 of the W.T. Act, 1957, for rectification of the value of the shares as per the W.T. Rules, 1957, on May 19, 1971. Therein he made a prayer that the value of the shares be reduced to Rs. 20.15 from Rs. 50.04 per share in the assessment order. The WTO rejected the said prayer. However, he held that there was a mistake in calculation in the assessment order and, therefore, he recalculated the value of the shares at Rs. 46.29 per share. In doing so he worked out the value of the shares and the revised net wealth of the assessee as under :

Rs. Rs. Rs.

Total assets as per balance-sheet of

M/s. Oswal Woollen Mills Ltd. as on

31-12-1967 1,51,65,838

Less advance tax payments not con- -----------

sidered as assets. 34,42,312

Balance assets 1,17,23,526

Less liabilities:

1. Secured Loans 21,28,296

2. Unsecured loans 14,01,136

3. Current liabilities &

provisions 58,42,998

Less provisions for taxes 36,99,182

---------

21,43,816

Add current tax 3,80,140

--------- 25,23,956

--------- -----------

60,53,388

1,17,28,526

Deductible liabilities 60,53,388

-----------

Net assets 56,70,138

No. of equity shares 94,933

Break-up value per share Rs. 59-73

77½% thereof Rs. 46-29

The revised net wealth of the

assessee is computed as under:

Net wealth assessed as per order,

dated 24-10-1968 3,51,739

Less value of 4,000 shares 2,00,160

--------

1,51,579

Add value of 4,000 shares @ Rs. 46-29

per share as worked out above 1,85,160

--------

Revised net wealth 3,36,739.

4 The assessee went up in appeal before the AAC. It was submitted on behalf of the assessee before him that, while calculating the value o