Judgment :- 1. The following three questions have been referred to us under S.27 (1) of the Wealth Tax Act, 1957 (hereinafter referred to as the Act) at the instance of the Commissioner: "(1) Whether on the facts and in the circumstances of this case, the liability towards Wealth-tax calculated on the basis of wealth-tax returns filed by the assessee is an admissible deduction under S.2 (m) of the Wealth Tax Act for the purpose of computation of the net wealth of the assessee for the assessment years 1958-59,1959-60 and 1960-61? (2) Whether on the facts and in the circumstances and the provisions of S.7 (2), the deletion of Rs. 5, 13, 390, Rs. 3,17,448 and Rs. 9,19, 809 representing the differences between the market value and the book value of the quoted shares held by Narayanan Investment Trust (P) Ltd., in computing the value of the shares of that company as on 16th August 1957,16th August 1959 (?) and 16th August 1959 was justified? (3) Whether on the facts and in the circumstances of the case, the Tribunal is justified in law to hold that an amount of Rs. 7,00.000 being the provision made for tax and shown in the Balance Sheet as on 16th August 1957 should be allowed as a deduction in computing break-up value of the shares in M/s. Narayanan Investment Trust (P) Ltd.?" 2. These questions arise out of an order passed by the Appellate Tribunal dealing with the assessments of the respondent to Wealth-tax for the year 1958-59,1959-60 and 1960-61. The order is a composite one and is at page 21 of the Paper Book. 3. Out of the three questions referred to us, it is conceded by the Departmental representative that question No. 3 will have to be answered in favour of the assessee in view of the decision of the Supreme Court in Kesoram Industries and Cotton Mills Ltd. v. Commissioner of Wealth Tax (Central), Calcutta (1960) 59 I. T. R.767. We do so and answer question No. 3 in favour of the assessee and against the Department. 4. Passing on to question No.1 the point that arises for determination is whether the Wealth-tax payable can be taken into account in estimating the value of the assets as on the valuation date for the year for the purpose of assessment to Wealth-tax. 4. Passing on to question No.1 the point that arises for determination is whether the Wealth-tax payable can be taken into account in estimating the value of the assets as on the valuation date for the year for the purpose of assessment to Wealth-tax. Dealing with the question of the assessment for the first of the years with which we are concerned, 1958-59, the question is whether as on 31st March 1958, which is the valuation date, any amount can be deducted from the estimated value of the assets as on that date in determining the assets taxable for the year commencing on 1st April 1958 and ending on 31st March 1959, that is the year 1958-59. To resolve this question it is necessary to read the definition of the 'valuation date' as well as the charging section of the Act. "2 (q) 'valuation date' in relation to any year for which an assessment is to be made under this Act, means the last day of the previous year as defined in S.3 of the Income-tax Act if an assessment were to be made under that Act for that year:" (Proviso omitted) "3. Subject.to the other provisions contained in this Act, there shall be charged for every assessment year commencing on and from the first day of April, 1957, a tax (hereinafter referred to as wealth-tax) in respect of the net wealth on the corresponding valuation date of every individual, Hindu undivided family and company at the rate or rates specified in the Schedule." 5. From a reading of the charging section it is clear that the liability for the Wealth-tax for the year 1958-59 commences only on the 1st day of April, 1958 and not earlier than that. So there is no liability towards any Wealth-tax for the year 1958-59 as on 31st March 1958. But any liability towards the Wealth-tax for the year 1957-58 which was in existence as on 31st March 1958 must be taken into account in determining the assets as on that date which can be charged under S.3 for the year 1958-59. This of course can be done only subject to the limitations introduced by the amendment effected to S.2 (m) by the introduction of sub-clause (Hi) therein. This of course can be done only subject to the limitations introduced by the amendment effected to S.2 (m) by the introduction of sub-clause (Hi) therein. In the light of the above, our answer to the first question referred to us is that the Wealth-tax outstanding on the 'valuation date' for each of these years subject to the limitations introduced by S.2 (m) (in) must be deducted in determining the value of the assets as on those dates. 6. The only remaining question pertains to the manner in which the shares held by the Narayanan Investment Trust Private Ltd., Trivandrum should be valued for the purpose of finding out the value of the shares held by the assessee in that concern. The assessee held 2000 shares of Rs. 100 each in Narayanan Investment Trust Private, Ltd. and accordingly the assessee valued these shares at Rs. 2,00,000 for the purpose of assessment to Wealth-tax. On the basis of the entries as on 16th August, 1957 in the Balance Sheet of Narayanan Investment Trust Private Ltd. the assessing authority as well as the Appellate Assistant Commissioner had valued the shares held by Narayanan Investment Trust Private Ltd. not on the value shown in the Balance Sheet but on the market value quoted for those shares. Having done so, the value of the shares held by the assessee in the Narayanan Investment Trust Private Ltd. has been computed and an enhanced value has been attributed to these shares and assessments have been made to Wealth-tax on that basis. As a result of this for the year 1958-59 Rs. 5,13,390 was added to the value of the shares held by Narayanan Investment Trust Private Ltd, a sum of Rs. 3,17,448 for the year 1959-60 and a sum of Rs. 9,19,809 for the year 1960-61. These additions made by the Appellate Authority as well as the assessing authority were found to be unjustified and the Tribunal deleted these additions. In so doing they observed: "The market value would have to be taken as approximating to their intrinsic value. This intrinsic value would depend on the net assets of the particular company. Unless there are special circumstances indicating gross under-valuation of asset or overvaluation of liabilities or the existence of secret reserve, the balance sheet should afford a safe guide for the valuation of the shares in the company." 7. This intrinsic value would depend on the net assets of the particular company. Unless there are special circumstances indicating gross under-valuation of asset or overvaluation of liabilities or the existence of secret reserve, the balance sheet should afford a safe guide for the valuation of the shares in the company." 7. The method adopted in drawing up the Balance Sheet of Narayanan Investment Trust Private Ltd., we find, is in accordance with the provisions of S.211 of the Companies Act, 1956 read with Part 1 to the 6th schedule in the Companies Act, 1956. These provisions provide that in valuing the investments of a company the quoted market value as well as the cost value must be shown in the Balance Sheet. So the shares held by Narayanan Investment Trust Private Ltd. were valued at their cost price in the Balance Sheet and complying with the provisions referred to their quoted market value has also been shown in a separate column. It is the quoted market value which the authorities functioning under the statute took as the correct value of those shares and on that basis the value of the shares held by the assessee in Narayanan Investment Trust Private Ltd. was computed. The question is whether this procedure is justified or not. We get an indication of the correct procedure to be adopted in the Supreme Court decision in Kesoram Industries and Cotton Mills Ltd. v. commissioner of Wealth-tax (Central), Calcutta (1966) 59 ITR. 767. Their Lordships observed: "It was also open to the Wealth-tax Officer to reject the figure given by the assessee and to substitute in its place another figure, if he was, for sufficient reasons, satisfied that the figure given by the assessee was wrong." 8. There was nothing on the facts and in the circumstances to indicate that the valuation shown in the Balance Sheet of the company was wrong; needless to say there was no sufficient reason for saying so. It is therefore not possible to reject the value shown in the Balance Sheet of the company. If we may go further, we can find various reasons for not showing the assets at their quoted market value. It is mentioned in the Tribunal's order that Narayanan Investment Trust Private Ltd. is a company dealing in shares. It is therefore not possible to reject the value shown in the Balance Sheet of the company. If we may go further, we can find various reasons for not showing the assets at their quoted market value. It is mentioned in the Tribunal's order that Narayanan Investment Trust Private Ltd. is a company dealing in shares. If that be so, if these shares had been sold at the market rate, the difference between the cost price and the sale pries would be income on which tax would have to be paid. It is also possible to conceive of various other complications; in regard to the shares held by Narayanan Investment Trust Private Ltd. the real value of these shares would depend on the actual condition and solvency of the company in which the shares ar3 held. Whatever that be, applying the principle in the Supreme Court decision we have no hesitation in saying that it is not possible to say on the facts disclosed that the valuation in the Balance Sheet was wrong. There is therefore no justification for interfering with that valuation, On this ground, we must answer question No.2 in favour of the assessee. Before finally doing so, we must express our difficulty in understanding this question as it is framed; particularly the significance of the reference to S.7 (2) of the Act in the question. That sub-section can have no application and we find that by virtue of that section all these additions could not have been made for the assessee was not carrying on business and the only other elements mentioned in the question are the facts of the ease which we have adverted to. As we said, we find no justification for interfering with the valuation as shown in the Balance Sheet for those shares held by Narayanan Investment Trust Private Ltd. 9. We answer question No. 2 in favour of the assessee and against the Department, We make no order as to costs.