JUDGMENT NASIM SIKANDAR, J.- in this further appeal under Section 27(1) 4 of the Wealth Tax Act, 1963, the Commissioner of Income tax/Wealth Companies Zone, Faisalabad claims that following questions of law have arisen out of the order of a Division Bench of the Income Tax Appellate Tribunal Camp at Faisalabad, dated 24.6.1998:-
(a) "Whether under the facts and circumstances of the case, the learned Income Tax Appellate Tribunal was justified to direct that provision for taxation should be excluded for calculating the break-up value of share?
(b) Whether the provision for taxation created by diversion of profit of current as well as previous years can be allowed as liability in contravention to rule 8(ii)(c) of the Wealth Tax Rules, 1963?"
2. The assessee-respondent is an individual. During the course of assessment proceedings for the year 1990-91 it was observed that he held 1250 shares of Messrs Saafina Industries (Pvt.) Limited, Faisalabad. The Assessing Officer determined the value per share at Rs. 746.62 after lumping up paid up capital, reserves and provision for taxation.
3. Learned First Appellate Authority allowed the appeal on 8.3.1993 filed against the inclusion of provision for taxation by relying upon a judgment of the Delhi High Court reported as re: C.W.T. v.
Sheela Bahagat Ram (1971, 81, ITR 11) and a judgment of this Court cited as re: C.W.T. v. Fauzia Mughis (1975) 32 Taxation 1.
4. Heard the learned counsel for the Revenue.
5. Learned counsel for the Revenue relies upon r: CWT v. L.G. Ramamurthy (1999 PTD 942) which is hardly of any avail. The ratio settled in re: Bharat Hari v. Singhania v. CWT (1994) 207 ITR 1 rather affirms the view adopted by Delhi High Court which was followed by the Tribunal. The other two cases relied upon by the learned counsel for the Revenue re: Commissioner of Income Tax v.
Udayan L. Gujjar (1999 PTD 3765) and re: Commissioner of Wealth Tax v. Vikram Swarup (1998 PTD 1164) are clearly distinguishable, in the first case it was held that the Tribunal was not right in directing the Wealth Tax Officer to value the unquoted shares of the private companies by holding that the advance tax paid and shown on the assets side of the balance sheet of the company could not be deducted from the tax payable in determining whether the provision for taxation was in excess over the tax payable with reference to the book profit, in the second case the Honourable Judges of the Calcutta High Court were considering rule 1-D of Indian Wealth Tax Rules 1957. Sub- clause (e) of explanation II to that rule reads as under:-- "any amount representing provision for taxation other than the amount referred to in clause (1)(a) to the extent of the excess over the tax payable with reference to the book profits in accordance with the law applicable thereto."
That provision being different from rule 8(c)(ii) of the Wealth Tax Rules, 1963 the ratio settled therein cannot be made applicable to the facts in hand.
6. The stress by the learned counsel for the Revenue on rule 8(c)(ii) of the Wealth Tax Act, 1963 is also impertinent. That rule does not in any manner prohibits exclusion of provision for taxation while computing the value per share of a non-listed company. The rule only requires an Assessing Officer that a provision for liabilities in the balance sheet should carefully be scrutinized with a view to exclude therefrom items which should really form part of the reserves, in other words the reserves are to be included in the paid up capital, while computing valuation per share. However, the provisions for liabilities are to be excluded with the only, rider that the Assessing Officer will examine them on case to case bail is in order to see if these provisions really fore in part of reserves or are required to be taken as part of liabilities. .
7. Since the view adopted by the learned Tribunal is supported they" the0 aforesaid provision's* of rule as' well as the authoritative pronouncement made by this Court as well as by the Supreme Court of Pakistan^ we 'will return an affirmative*answer to the*question
8. This judgment will also dispose of I.T.A. No. 475 of 1998.