U. L. Bhat, C.J.— The following questions have been referred by the Appellate Tribunal under section 27 (1) of the Wealth Tax Act, 1957 (for short, the Act) at the instance of the Revenue : (i) Whether on the facts and in the circumstances of the case, the Tribunal was justified in treating the shares of M/s Moheema Ltd., M/s Sonai River Tea Co. Ltd. and M/s Numburnadi Tea Company Ltd. as unquoted shares within the meaning of Rule 1A (1) of the Wealth Tax Rules, 1957 though they had been quoted at the Calcutta Stock Exchange ? (ii) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that Rule ID of the Wealth-tax Rules must prevail over section 7(1) of the Wealth Tax Act, in valuing unquoted equity shares ? 2. The reference relates to the assessment of wealth tax year 1977-78 under the Wealth Tax Act, 1957 (for short, the Act) and the Wealth Tax Rules, 1957 (for short, the Rules). The relevant valuation date is 31.12.1976. The assessee is an individual owning wealth including equity and preference shares in three public limited companies, namely, M/s Moheema Ltd., M/s Sonai River Tea Company Ltd. and M/s Numburnadi Tea Company Ltd. The assessee claimed that shares of these companies are quoted at the Calcutta Stock Exchange and showed in the return the market value of the shares at what according to him are the prevailing rates quoted at the stock exchange. The Wealth Tax Officer (WTO) found that M/s Moheema Ltd. is a subsidiary of another private limited company, by name M/s Sookerating Tea Co Ltd., which is holding 96% of the equity shares of M/s Moheema Ltd. and majority of the remaining 4% shares were held by members of Saharia family group and that the holding company is controlled and managed by Saharia family. He found that 80% of shares of M/s Sonai River Tea Co. Ltd and M/s Numburnadi Tea Company Ltd. were held by members of the Saharia family in their own names or in the name of the Bank as security. He found that 80% of shares of M/s Sonai River Tea Co. Ltd and M/s Numburnadi Tea Company Ltd. were held by members of the Saharia family in their own names or in the name of the Bank as security. He found that there had been no transaction in the stock exchange within two years prior to the valuation date in the shares of M/s Moheema Ltd, within one year prior to the valuation date in shares of M/s Sonai River Tea Company Ltd. and shares of M/s Numburnadi Tea Company Limited. He also found that in the present distribution of shares, the shares of the three companies are not eligible for listing at any stock exchange and the companies have not complied with the listing conditions and the provisions of the Securities Contract (Regulation) Rules, 1957 and thereby rendered themselves liable for delisting. He therefore held the shares to be 'unquoted shares' within the meaning of Rule 1A (1) of the Wealth Tax Rules, 1957 (for short, the Rules) and valued the shares under Rule ID of the Rules on the break up value. 3. In appeal, the Appellate Assistant Commissioner (AAC) reversed this decision and held that the shares must be valued at the rates quoted in the stock exchange. In appeal at the instance of the Revenue, the Tribunal restored the decision of the WTO on the ground that the shares were not regularly quoted in any st ock exchange. 4. Question No. (i) : Rule 1A(1) defines' unquoted share' thus : "(1) 'unquoted share' means an equity share or a preference share of a company other than any such share the value of which is regularly quoted at any recognised stock exchange; " The emphasis appears to be on the words 'the value of which is regularly quoted.'' If the value of shares of a company is regularly quoted at the stock exchange, ordinarily the quoted price shall be the basis for valuation for the purpose of the Act and the Rules. Rule 1C prescribes how the market value of unquoted preference shares is to be assessed. Rule ID lays down how market value of unquoted equity shares of companies other than investment companies and managing agency companies is to be determined. 5. The three companies are public limited companies. Rule 1C prescribes how the market value of unquoted preference shares is to be assessed. Rule ID lays down how market value of unquoted equity shares of companies other than investment companies and managing agency companies is to be determined. 5. The three companies are public limited companies. According to the assessee, the shares of these companies are listed in the Calcutta Stock Exchange and value of shares is regularly quoted in the stock exchange. The valuation date is 31.12.1976. The last transaction in the shares of M/s Moheema Ltd. was on 24.4.1974. The last transaction in the shares of M/s Sonai River Tea -o. Ltd. before the valuation date was on 30.4.1976 and the first transaction in the shares after the valuation date was on 12.3.1978. The two dates in the case of shares of M/s Numburnadi Tea Co. Ltd. are 3.12.1976 and 22.1.1977, respectively. It is admitted by the assessee that there were no other transitions at the stock exchange in regard to these shares. It was considering these circumstances that the Tribunal held that the shares of the three companies cannot be said to be 'regularly quoted' in the absence of regular transactions. According to learned counsel for the assessee, even if there are no regular transactions, prices of shares will be regularly quoted at the stock exchange with reference to the price fetched at the last transaction and therefore for shares of a company to be regarded as regularly quoted there need not be regular transactions and even if there was only a solitary transaction or there were only isolated transactions, the shares of the company must be regarded as regularly quoted. 6. In Commissioner of Wealth-tax, Assam vs. Mahadeo Jaian & others, (1972) 86 ITR 621, the Supreme Court considered various methods of valuation of shares. The company concerned in the case was a private limited company. The Court observed (at page 627) as follows : "...Where shares in a company are bought and sold on the stock exchange and there are no abnormalities affecting the market price the price at which the shares are changing hands in the ordinary course of business is usually their true value. The Court observed (at page 627) as follows : "...Where shares in a company are bought and sold on the stock exchange and there are no abnormalities affecting the market price the price at which the shares are changing hands in the ordinary course of business is usually their true value. These quotations generally reflect the value of the asset having regard to the several factors which are taken into consideration by persons who transact business on the stock exchange and by the buyers who want to invest their money in any particular share or shares." (emphasis supplied) The conclusions arrived at by the Court on various aspects of valuation are seen at page 634. Conclusion No. (1) reads thus : "(1) Where the shares in a public limited company are quoted on the stock exchange and there are dealings in them, the price prevailing on the valuation date is the value of the shares." (emphasis supplied) 7. In Commissioner of Gift Tax, Bombay vs. Smti Kusumben D. Mahadevia, AIR 1980 SC 769 , after referring to the earlier decision, the Supreme Court observed that the conclusions arrived at in the earlier decision, though they do not amount to any hard and fast rule, represent well settled general principles. 8. We may in this connection refer to a decision of a Special Bench of the Calcutta High Court in Smti Nirmala Birla vs. Wealth Tax Officer, 1975 Tax LR 982. Datta, J. at paragraph 94, observed as follows : "...The daily stock exchange quotations set out in official quotations under its rules and as is obvious, represent the rates at which transactions have been done. Such quotations of shares published by the stock exchange of daily transactions also contain a compilation of quotations of various securities and shares not necessarily quoted in the daily quotation in absence of transactions but based on past transactions and the date of last transactions is also set out therein. To enable the assessee to avail of the quotation of shares of a stock exchange for purposes of valuation under the Act, it is necessary that such shares must be regularly quoted at any recognised stock exchange. "Regularly quoted" in Rule 1-A (1) in my opinion means a quotation of shares with regularity, the last quotation being within a reasonably proximate time of the date of the valuation. "Regularly quoted" in Rule 1-A (1) in my opinion means a quotation of shares with regularity, the last quotation being within a reasonably proximate time of the date of the valuation. If there is a quotation of a share in the stock exchange on a date in 1962 or even in 1966 when the date of valuation is March 31, 1968, it will not be a quoted share as implied by the definition under the said clause but it will be "unquoted share* as therein defined in absence of regular quotation or regular transactions." (emphasis supplied) 9. We are inclined to agree with the view expressed by Datta, J. which is strengthened by the observations of the Supreme Court. The quotation at the stock exchange for the share of any company need not necessarily reflect the transactions on the day. It may reflect the price fetched at the last trans­action which may have been a few days, weeks, months, or years earlier. Net wealth has to be valued for the purpose of the Act as on the valuation date namely, the last day of the previous year as defined in section 3 of the Income Tax Act, that is, 31st December of the previous year. Necessarily the valuation must reflect the position as on the valuation date and if that is not practicable, as on a date within reasonable proximity to the date of valuation. It is only this idea which is reflected in the words "the valuation of which is regularly quoted" in Rule 1A (I) of the Rules. When there has been only a solitary transaction or when there have been only isolated transactions of shares of a particular company in a stock exchange it cannot be said that the shares of the company are regularly quoted. Regularity of transactions is implicit in the concept of 'regularly quoted.' If there were no regular transa­ctions in the shares of a company at a stock exchange or if the transactions were isolated or not within reasonable proximity to the date of valuation, it cannot be said that shares are "regularly quoted shares", and such shares must be regarded as "unquoted shares" within the meaning of Rule 1A (1) of the Rules. Question No (i) has to be answered in favour at the Revenue. 10. Question No (i) has to be answered in favour at the Revenue. 10. Question No (ii): Rule ID deals with determination of market value of unquoted equity shares of companies other than investment companies and managing agency companies. The first part of the Rule states : "The market value of an unquoted equity share of any company, other than an investment company or a managing agency company shall be determined as follows:-......" A study of the rule would indicate that the method prescribed therein is a modified form of the break-up method. 11. It is argued for the assessee that shares of a company which is a going concern must be treated differently from the shares of a company which is in dire straits or facing liquidation, and the Supreme Court has held in Mahadeo Jalan's case,86 ITR 621; Mahadevia's case, AIR 1980 SC 769 and Ambalal Sarabhai's case, 170 ITR 144 that valuation of shares of a company which is a going concern must be based on income or dividend and must reflect profitability. Viewed in this light, according to the assessee, if Rule ID of the Rules is regarded as mandatory, it will be in conflict with the provisi­ons in section 7(1) of the Act as interpreted by the Supreme Court and hence the Rule must be regarded as directory and in the case of a going concern the normal method based on profitability must be adopted. According to the Revenue, section 7(1) itself is subject to Rules made in this behalf, including Rule ID of the Rules and having regard to the language used is the statutory provision and in the statutory Rule, Rule ID must be regarded as mandatory. The Supreme Court has not pronounced on this aspect specifically and various High Courts have adopted different views. The High Courts of Andhra Pradesh, Bombay, Delhi, Karnataka and Madras have held Rule ID of the Rules to be directory while the High Courts of Allahabad, Calcutta and Kerala have taken the contrary view. The Supreme Court has not pronounced on this aspect specifically and various High Courts have adopted different views. The High Courts of Andhra Pradesh, Bombay, Delhi, Karnataka and Madras have held Rule ID of the Rules to be directory while the High Courts of Allahabad, Calcutta and Kerala have taken the contrary view. See, Smti Kusumben D.Mahadevia vs. Commissioner of Wealth Tax, Bombay,124 ITR 799 (Bombay); Sharbati Devi Jhalani vs. Commissioner of Wealth Tax, Delhi, 159 ITR 549 (Delhi); Commissioner of Wealth Tax vs. RK Gupta, 183 ITR 640 (Delhi); Dr.D.Reouka vs. Commissioner of Wealth Tax, 175 ITR 615 (Andhra Pradesh); Commissioner of Wealth Tax vs. S. Jindal, 194 ITR 539 (Karnataka); KM Mammen vs. Wealth Tax Officer, 139 ITR 357 (Madras); Commissioner of Wealth Tax, Kanpur vs. Laxmipat Singhania, 111 ITR 272(Allahabad); Commissioner of Wealth-Tax vs. Padampat Singhania, 117 ITR 443 (Allahabad); Commissioner of Wealth-Tax vs. Mamman Varghese & others, 139 ITR 351 (Kerala); Mrs. Grace Collis & others vs. Commissioner of Wealth Tax, 172 ITR 597 (Kerala) and Commissioner of Wealth Tax vs. India Exchange Traders, Association, 197 ITR 356 (Calcutta). 12. We will examine the matter independently before dealing with the reasoning in the above decisions. The Act is to provide for levy of wealth-tax. Section 3 is the charging section by which tax is leviable in respect of net wealth on the corresponding valuation date at the rates specified in Schedule 1. Section 4 contains inclusive definition of net wealth. Section 5 deals with exemptions in regard to certain assets and section 6 deals with exclusion of assets and debts outside India. Section 7 lays down how value of assets has to be determined. Sub-section (1) of section 7 reads as follows : “(1) Subject to any rules made in this behalf, the value of any asset, other than cash, for the purposes of this Act, shall be estimated to be the price which in the opinion of the Wealth-tax Officer it would fetch if sold in the open market on the valuation date." (emphasis supplied) The above definition adopts the general formula regarding assessment of value of property adopted in similar statutes. This provision has been explained by the Supreme Court in Mahadeo Jalan's case, (86 ITR 621). This provision has been explained by the Supreme Court in Mahadeo Jalan's case, (86 ITR 621). It is to be emph­asised that the case related to assessment years prior to 6.10.1967, with effect from which date Rule ID of the Rules has been introduced. The judgment naturally did not take into consideration the impact of Rule ID of the Rules. The Supreme Court, at page 633 of the reported decision, arrived at six conc­lusions. Where the shares in a public limited company are quoted on the stock exchange and there are dealings in them, the price prevailing on the valuation .date is the value of the shares. Where they are not so quoted, or where the shares are of a private limited company, the value is determined by reference to the dividends if any, reflecting the profit-earning capacity on a reasonable commercial basis. But, where they do not, then the amount of yield on that basis will determine the value of the shares. This is known as the yield method. If the results of the dividend method and yield method differ, an intermediate figure may have to be computed. Where the company is ripe for winding up then the break-up value method determines what would be realised by that process. If there are fluctuations of profits and uncertainty of the conditions on the date of valuation preventing any reasonable estimate of the prospective profit and dividends, valuation by reference to the assets would be justified. It is unnecessary to refer to the other conclusions of the Supreme Court. 13. The Rules framed in 1957 did not contain any specific provision regarding the determination of market value of shares of companies and the guidelines in that regard were available only in tae provision in section 7 (1) of the Act, which was interpreted by the Supreme Court in Mahadeo Jalan's case. Rules 1C and ID were introduced by the Wealth-tax Amendment) Rules, 1967 with effect from 6.10.1967. Rule 1C indicates the manner in which market value of unquoted preference shares is to be determined. Rule ID lays down the manner in which the market value of unquoted equity shares of companies other than investment companies and managing agency companies is to be assessed. It is unnecessary to refer to the exact formula laid down in Rule ID. Rule 1C indicates the manner in which market value of unquoted preference shares is to be determined. Rule ID lays down the manner in which the market value of unquoted equity shares of companies other than investment companies and managing agency companies is to be assessed. It is unnecessary to refer to the exact formula laid down in Rule ID. It is sufficient to indicate that the formula is a variant of the break­up method. In laying down the formula, Rule ID states as follows : "The market value of an unquoted equity share of any company, other than an investment company or a managing agency company shall be determined as follows :-"(emphasis supplied) 14. While the expression 'shall' need not always be indicative of the mandatory nature of a provision and the word 'may' need not always be indicative of its directory nature, ordinarily the word 'shall' may be taken to be indicative of the intention of the legislature or the Rule-making authority to make the provision mandatory. The intention has to be gathered on the basis of the general purpose of the statute, the purpose of the particular provision, the inter-relationship between the two, the language used and the consequences of interpreting the provision to be mandatory or directory and the mischief, if any, sought to be avoided. 15. The object of the statute is to levy tax on wealth. This is intended not only to secure revenue to the State, but also to subserve the Directive Princi­ple of State Policy incorporated in Article 38 of the Constitution enjoining the State to secure a social order for the promotion of welfare of the people and Article 39 enjoining the State to direct its policy towards securing that the operation of the economic system does not result in the concentration of wealth and means of production to the common detriment. It is to effectuate the purpose of lavying tax on wealth that section 7 has been incorporated. The Supreme Court arrived at the conclusions referred to already on an interpretation of section 7 (1) of the Act and drawing a distinction between valuation of shares of a company which is a going concern and a company which is facing liquidation on the basis of the comments in Green on Death Duties and a decision of the Privy Council and certain other decisions. The Rule-making authority must have incorporated Rule ID of the Rules having in view these legal materials and intended sharp departure from the position as it obtained in England in regard to valuation of unquoted shares of certain types of companies. The intention underlying Rule ID of the Rules could not have been to prescribe an alternate method of valuation in the case of a company facing liquidation so as to leave it to the discretion of the WTO to choose one of the methods of valuation. The intention could only have been to pin down the WTO to a particular method in relation to unquoted equity shares of certain types of companies. If the Rule is interpreted to be directory, it would vest unguided discretion in the statutory authority, which could not have been the intention of the Rule-making authority. If the Rule is understood as mandatory the WTO is bound to follow the particular method in regard to assets falling within its ambit. This, it is said, may lead to hardship and excessive taxation in several cases. In our view, this is only an assumption not supported by any data. The Rule has taken care to ensure that the valuation is not excessive by prescribing a percentage of the break up value as the market value. 16. We will now advert to the contention that Rule ID of the Rules is in conflict with the decision of the Supreme Court in Mahadeo Jalan's case (86 ITR 621) and hence the Rule should not be held to be mandatory. Rules made under a statute must be treated for all purposes of construction or obligation exactly as if they are in the Act and are to be of the same effect as if contained in the Act. and are to be judicially noticed for all purposes of construction or obligation. See, State of Uttar Pradesh & others vs. Babn Ram Upadhya, AIR 1961 SC 751 at para 23. A Rule and a statutory provision must be harmoniously construed and in case of conflict, the Rule must give way to the statutory provision. A statutory Rule, while even subor­dinate to the parent statute, is otherwise to be treated as part of the statute and as effective. See, State of Tamilnadu vs. M/s Hind Store, AIR 1981 SC 711 at para 11. This is the ordinary principle relating to subordinate legislation. A statutory Rule, while even subor­dinate to the parent statute, is otherwise to be treated as part of the statute and as effective. See, State of Tamilnadu vs. M/s Hind Store, AIR 1981 SC 711 at para 11. This is the ordinary principle relating to subordinate legislation. However, this principle may not be apposite in the present case in view of the language used in section 7(1) of the Act. Section 7 (1) of the Act states that the provision contained therein is "subject to any rules made in this behalf". This would indicate that the legislature found it a matter of complexity to prescribe in the statute itself methods of valuation for different kinds of assets and at the same time, was not prepared to leave it to the domain of subordinate legislation. The legislative device of making the provision in section 7(1) of the Act subject to any Rules made in this behalf is intended to indicate the intention of the legislature to give the Rule the same status as the statutory provision. In Harish Chandra Bajpai & another vs. Triloki Singh & another, AIR 1957 SC 444 , the Supreme Court, considering section 90 (2) of the Representation of the People Act, 1951 which contained the words "subject to the provisions of this Act and of any rules made thereunder" observed : "The true scope of the limitation enacted in S. 90 (2) on the application of the procedure under the Civil Procedure Code is that when the same subject matter is covered both by a provision of the Act or the Rules and also of the Civil Procedure Code and there is a conflict between them, the former is to prevail over the latter." 17. Rule ID of the Rules cannot therefore be regarded as an ordinary subordinate legislation which has to be discarded if in conflict with the statutory provision. The language of section 7 (1) of the Act indicates that it is subject to the Rules. The clear intention of the legislature is to enable specific methods of valuation of specific kinds of assets to be prescribed by Rules and to treat such prescription as part of the statute. The language of section 7 (1) of the Act indicates that it is subject to the Rules. The clear intention of the legislature is to enable specific methods of valuation of specific kinds of assets to be prescribed by Rules and to treat such prescription as part of the statute. The same idea has been expressed by the Kerala High Court in Mannnan Varghese case (139 ITR 351) in the following words: "The section itself opens with the words "subject to any rules made in this behalf", thereby bringing out the paramountcy of the rules.' In our view, Rule ID of the Rules is mandatory. 18. We will now advert to the reasons which weighed with some of the High Courts in holding the Rule to be directory. It is said that Rule ID of the Rules goes against the recognised methods of valuation laid down by the Supreme Court in Mahadeo Julan's case (86 ITR 621), according to which break-up method is to be followed ordinarily only in the case of a company facing liquidation. We do not understand the decision of the Supreme Court laying down any rigid formula. The conclusion or Rules formulated by the Supreme Court in a case relating to a period prior to incorporation of Rule ID of the Rules are rules of general or ordinary application and cannot affect the power of the legislature or the Rule making authority to prescribe any particular method with reference to a particular kind of asset. It is also not correct to assume that Rule ID of the Rules follows in its entirety the break up method. It prescribe a modified from of the break up methed. 19. Sub-section (1) of section 46 empowers the Rule making authority to make Rules for carrying out the purposes of Act. Sub-section (2) (a) provides that- "(2) In particular, and without prejudice to the generality of the foregoing power, rules made under this section may provide for- (a) the manner in which the market value of any asset may be determined;'' It is pointed out that section 46 (2) (a) uses the word 'may' while some of the other clauses in section 46(2) use the word 'shall', and hence the Rule making authority cannot make a Rule mandating the WTO to about a particular method of valuation. This reasoning ignores the legislative device adopted in section 7 (1) of the Act making the provision subject to the Rules and there­fore cannot stand scrutiny. In view of this legislative device also the word 'may' used in section 46 (2) (a) has to be understood as 'shall'. Section 42 of the Act confers a discretion on the Rule making authority to make a Rule providing for the manner in which the market value of any asset is to be determined; but once the Rule is made it will be deemed to be part of the substantial provision in section 7 (1) of the Act and adoption of the method by the WTO is imperative. 20. In Mahadeo Jalan's case (86 IT« 621), the Supreme Court had no occasion to consider the impact of Rule ID of the Rules. Mahadevia's case ( AIR 1980 SC 769 ) relates to the provisions of the Gift Tax Act, 1958. The Supreme Court declined to consider the effect of Rule 10 (2) of the Gift Tax Rules, 1958, which had given an option to the assessing authority to adopt one of two methods of valuation on the ground that it was not considered by the Tribunal. Ambalal Sarabhai's case (170 ITR 144) also arose under the Gift Tax Act, 1958 and it was held that Rule 10 (2) of the Gift Tax Rules, 1958 did not apply to the facts of the case and therefore it was not considered. Hence it cannot be said Rule ID of the Rules is in conflict with the view expressed by the Supreme Court. 21. It is said that if Rule ID of the Rules is mandatory, it will be in conflict with section 7 (3) read with section 16Aofthe Act as also section 24 (6) of the Act. Section 7 (3) reads thus : "(3) Notwithstanding anything contained in sub-section (1), where the valuation of any asset is referred by the Wealth-tax Officer to the Valuation Officer under section 16A, the value of such asset shall be estimated to be the price which, in the opinion of the Valuation Officer, it would fetch if sold in the open market on the valuation date or, in the case of an asset being a house referred to in sub-section (4), the valuation date referred to in that sub-section." Section 16A deals with reference to Valuation Officer. The Wealth Tax Officer may refer the valuation of any asset to a Valuation Officer only in cases covered by clauses (a) and (b) of sub-section (1) of section 16A of the Act. The Valuation Officer may pass an order in accordance with the other provisions of the section. On receipt of the order, the WTO shall, so far as the valuation of the asset in question is concerned, proceed to complete the assessment in conformity with the estimate of the Valuation Officer. It is argued that Rule ID of the Rules applies only to the valuation by the Wealth Tax Officer and not to that of the Valuation Officer and if a reference is made, Valuation Officer is not bound to follow Rule ID of the Rules and therefore this would lead to an anomalous situation. Assuming and without deciding that Valuation Officer is not bound by Rule ID of the Rules, it would only mean that the WTO has to follow the order of the Valuation Officer. There is no provision in the Act to the effect that the appellate authorities are bound to pass orders in conformity with the estimate of the Valuation Officer. Section 24 (6) has been repealed and does not require consideration. 22. It is also argued that break up method in relation to companies which are going concerns is unrelated to realities and is unjust. We need only point out that no attempt has been made to justify this contention with refer­ence to any fact situation. 23. We may also refer to the decision of the Calcutta High Court in India Exchange Traders' Association case (197 ITR 356) where reference is made to the Direct Tax Laws (Amendment) Act, 1989 which has recast with effect from 1.4.1989 the existing provisions of section 7. The main change affected is that the Rules for valuation of assets have been made a part of the Act itself by inserting Schedule HI to the Act. The main change affected is that the Rules for valuation of assets have been made a part of the Act itself by inserting Schedule HI to the Act. The Calcutta High Court has taken the view that this clearly manifests the legislative intent and gives an indication of the legislative recognition of the principles embodied in Rule ID of the Rules and is declaratory of the validity of Rule 1J since Parliament must be presumed to be aware of the confiding decisions of the High Courts, but nevertheless has given recognition to the decisions of the High Courts that Rule ID is mandatory. 24. For the reasons indicated above, we are unable to agree with the view taken by the High Courts of Andhra Pradesh, Bombay, Delhi, Karnataka and Madras and with respect, we are in agreement with the view taken by the High Courts of Allahabad, Calcutta and Kerala. We hold Rule ID of the Rules is mandatory. 25. Question No.(ii) is not happily worded. It is n jt a question of Rule ID of the Rules prevailing over section 7(1) of the Act or vice-versa. Rule ID of the Rules is mandatory and section 7(1) is subject to the Rule. Rule ID of Rules does not conflict with section 7 Cl) of the Act. It is to be regarded as part of section 7(1) of the Act and both the provisions must be harmoniously construed. Since there is nothing in section 7(1) which is in conflict with Rule ID of the Rules, it is legitimate to say that the Rule prevails. Question No. (ii), viewed in this light, must be answered in favour of the Revenue and in the affirmative. 26. We answer both the questions in favour of the Revenue and against the assessee, i.e. in the affirmative. 27. A copy of this judgment under the signature of the Registrar and seal of the High Court shall be transmitted to the Income-tax Appellate Trib­unal. In the circumstances, there will be no direction as to costs.