1. In compliance with the directions of this court the Income-tax Appellate Tribunal, Allahabad Bench, Allahabad, hereafter'the Tribunal', has referred the following questions under Section 27(3) of the W.T. Act, hereafter 'the Act', for the opinion of this court :
'1. Whether, on the facts and in the circumstances of the case, Rule 113 of the Wealth-tax Rules overrides the provisions of Section 24(6) of the Wealth-tax Act ?
2. Whether, on the facts and in the circumstances of the case, it is open to the revenue to rely on Rule 1D even though no specific argument was raised before the Tribunal ?
3. Whether on the facts and in the circumstances of the case, the Tribunal was justified in following the valuation as made by the valuers even though the valuation was not based on the statutory method of valuation provided under Rule 1D?
4. Whether, the valuers to whom the valuation of shares was referred under Section 24(6) of the Act, were, in law, bound to follow the. method of valuation prescribed by Rule 1D of the Wealth-tax Rules ?'
For the assessment years 1965-66 and 1966-67 the assessee, an individual, valued the unquoted shares of companies belonging to the J.K. group by taking the average of the value arrived at on the break-up value method and the yield, value method. The WTO did not accept that notion and took the value of these shares on the break-up value method. On appeal, the AAC followed the method of valuation which had been accepted by the Tribunal for the assessment years 1957-58 to 1960-61 and determined the value of these unquoted shares accordingly. Aggrieved the revenue filed appeals before the Tribunal. Pending these appeals, an order under Section 24(6) of the Act was passed by the Tribunal in the case of Sri Kailashpat Singhania (HUF) in similar appeals which had been filed by the revenue. The assessee in that case belongs to the same family as the present assessee and there also the valuation of unquoted shares belonging to the J. K. group was involved. The assessment year concerned was 1964-65. Since the assessee had failed to nominate a valuer as required by the provision, the Tribunal nominated Sri A.B. Tandon, F.C.A., of Kanpur, as the valuer on behalf of the assessee in exercise of the powers vested in it under Section 24(6)(a) of the Act. Apart from the case of Kailashpat Singhania (HUF) this question was involved not only in the case of the assessee but those of several other members of the same family. The valuers submitted a unanimous valuation report in the case of Sri Kaliashpat Singhania (HUF) and some others. In the case of the assessee, the Tribunal acting on the same, directed the WTO to adopt the value of the unquoted shares as per the valuation report. It may be noted that as a result, the value of the unquoted shares was taken at a somewhat increased rate than what had been adopted by the AAC and in the result the revenue's appeals werepartly allowed. Still aggrieved the revenue has got the questions indicated above referred to this court.
2. It would be seen that so far as questions Nos. 1, 2 and 4 are concerned, they do not arise out of the Tribunal's order and we have, therefore, to return them unanswered.
3. So far as questions Nos. 3 and 4 (sic) are concerned, in view of the provision contained in Section 24(6) of the Act, the Tribunal acted rightly in deciding the appeals in conformity with the valuation report. This provision in so far as it is relevant for the present purpose reads as under :
'24. (6)(a) Where the appellant objects to the valuation of any property, the Appellate Tribunal may, and if the appellant so requires, shall, refer the question of the disputed value to the arbitration of two valuers, one of whom shall be nominated by the appellant and the other by the respondent, and the Tribunal shall, so far as that question is concerned, pass its orders under sub-section (5) conformably to the decision of the valuers....'
In the present case the appeals had been filed by the revenue, which objected to the valuation of the unquoted shares as made by the AAC. It required the Appellate Tribunal to refer the question of the disputed value to arbitration. It nominated its valuer. The assessee failed to do so and then the Tribunal made an order under this provision and nominated a valuer for it. The valuers gave a unanimous report. The Tribunal was bound to pass its orders under Sub-section (5) conformably to the decision of the valuers and that it has done. This being the position the Appellate Tribunal has not committed (any) error in law in passing its order on the basis of the valuation report. We may mention that the decision of this court in CWT v. Sripat Singhania : 112ITR363(All) would not apply to the present case. What has been laid down in that case is that 'the Tribunal is not justified in approving an assessee's method of valuation of unquoted equity shares which is not in accordance with Rule 1D of the W.T. Rules, 1957. The situation which obtains in the present case is entirely different. Here at the instance of the revenue which was appellant before the Tribunal, the question of valuation of unquoted equity shares was referred to the arbitration of valuers. When the assessee failed to nominate his valuer, the Tribunal passed a formal order and nominated such valuer and thus under Sub-section (6)(a) of Section 24, the Tribunal was bound to pass its order in the appeal conformably to the decision of the valuers.
4. In the result, questions Nos. 1, 2 and 4 are returned unanswered while question No. 3 is answered in the affirmative, in favour of the assessee and against the department. The assessee is entitled to costs which we assess at Rs. 250.