appeal by Department relates to wealth-tax assessment for year 1975-76 of assessee Shri M. Ramaswamy. objections raised by Department pertain to determination of value of certain shares held by assessee in different companies. company in which assessee hold share, which were valued according to method stated in r. 1D, are Rukmani Mills Ltd., Pudukottai Co. (P) Ltd. and Pudukottai Corporation Ltd. AAC found that there was certain amounts in balance-sheet shown as provision for bad debts which were deducted from amounts shown under head 'unsecured loans as assets in relevant balance-sheets of companies. He held that such provision for bad debts should be excluded or deducted in determining net worth of shares and not included as was done by WTO. Aggrieved by his order Department is in appeal. Before we proceed to deal with dispute, it is necessary to point out that there is mistake in statement of facts by AAC, in regard to provision for bad debts. It is only in case of company Rukmini Mills Ltd., that from amount of unsecured loans under head 'loans and advances of Rs. 26,77,829.42 that amount of Rs. 11,33,190.09 as provision for bad debts has been deducted and net balance-sheet shown at Rs. 15,44,639.33. In balance-sheet of Pudukotait Co. (P) Ltd. amount of Rs. 22,64,113.17 referred to by him in his order is not provision for bad and doubtful debt from loans or other advances, but represents provision in respect of shares held by company as investments which are doubtful of realisation. Under head "loans and advances" certain amount is shown to be considered as doubtful and entire amount is deducted as provision made. Similarly, there is amount shown as doubtful in respect of dues from customers on account of bills and entire amount is shown as provision. But only item that appears to have been in dispute before AAC is amount deducted provision for shares or investments doubtful of realisation as stated above. With regard to Pudukottain Corpn. Ltd., amount of Rs. 2,96,683.28 considered by AAC is not provision in respect of loans or advances or other amounts due, but provision in respect of investments doubtful of realisation. In this company also, certain amounts are shown as unsecured loans or amounts due from customers doubtful of realisation and excluded from assets. dispute, however, before AAC appears to have been only with regard to amount shown as doubtful of realisation in respect of shares or investments. With this clarification on facts, we shall now proceed to consider objections of Department and contentions of assessee. In ground, first objection stated is that AAC erred in directing exclusion of provision for debts in computing break up value of shares in companies failing to note that amount in question had already been taken into by WTO. This ground is not clear to us and is evidently misconceived because while in respect of Rukmini Mills Ltd. s shares provision for bad debts have been directed to be deducted. In other two companies case, we have already stated, what is directed to be excluded are provisions in respect of shares or investments doubtful of realisation. In ground No. 3 objection raised is that AAC erred in directing that provision for bad debt should be excluded in computing break up value of shares under r. 1D of WT Rules. This also is not quite clear to us in face of earlier objection mentioned able where it is stated that WTO has already taken into consideration provision for bad debt. However, at time of hearing of appeal ld. Departmental representative advanced contention of Department to be that in first place for determination of shares of companies which are not quoted in stock exchange r. 1D is mandatory and according to rule there is no scope for deducting any liability falling under cl. (ii) of Explanation 2 to said rule, according to which any amount shown as liability in balance-sheet under items enumerated therein will not be eligible for deduction as liability. Item-C thereof mentions reserves by whatever name called other than those set apart towards depreciation. In this connection reliance is also placed in grounds of appeal on decisions reported in CWT vs. Pdampat Stnghania (1979) 9 CTR (All) 56: (1979) 117 ITR 43 (All) and CIT vs. D.V. Sone (1979) 119 ITR 266 (Bom). In (1979) 117 ITR 443 (All) it has been held that after framing of WT Rules unquoted shares have to be valued in accordance with said Rules and though it was open to authorities under Act to estimate market value of unquoted shares according to method they found more suitable prior to framing of rules, after framing of such relies, method to framing of rules, after framing of such relies, method prescribed under r. 1D should be applied. reference to (1979) 119 ITR 266 (Bom) in ground is evidently mistake as no decision concerning this question is seen reported on that page in that Volume of ITR. ld. Departmental representative at time of hearing also pointed out that decision of Bombay High Court in case of Smt. Kusumben D. Mahadevia vs. CWT (1980) 14 CTR (Bom): (1980) 124 ITR 799 (Bom) takes view that method prescribed under r. 1D of WT Rules for valuing unquoted share is only directory and not mandatory. assessee s ld. Representative relied on order of AAC. We consider that there is no merit in Department s objections. question before us is not whether r. 1D is mandatory or directory. It is as to whether in valuing shares of said companies under r. 1D amounts directed to be excluded by AAC should be included in computing net worth of shares. All that r. 1D provides is that values of all liabilities shown in balance-sheet of any company shall be deducted from value of assets shown in balance-sheet and net amount so arrived at shall be divided by total amount of paid up equity share capital and resultant amount multiplied by paid up value of each equity share is regarded as break up value subject to certain adjustments. rule does not provide for determination of value of assets. claim made by assessee for reduction of amounts in this case is not any deduction of liability, but reduction to be made in taking value of particular asset, i.e. its realisable or market value. rule when it states that liability shall be deducted from value of all assets shown in balance-sheet it does not indicate as to at what value assets are to be included. Strictly construed rule apparently takes note of only assets as shown in balance-sheet and we have already seen with reference to figures adverted to earlier in balance-sheet of companies concerned that amounts directed by AAC to be excluded do not form part of value of any assets at all. What is shown as asset in balance-sheet is net amount after deducting provisions for unrealisable part of same. Liability in ordinary sense and as contemplated in rule, according to us, is liability for any outstanding expenditure or other such items and does not contemplate fall or reduction in realisable value of any asst including loans or advances made to other persons. So, there is no question of assessee claiming any liability which he is not entitled to. As we have already noticed, according to strict construction of rule what is to be included as value of assets is aggregate of assets shown and included in balance- sheet and amounts considered doubtful of realisation in respect of any assets and deducted in arriving at total value of assets does not form part of assets. Apart from this, even if WTO feels that it is not established that amount shown as not realisable are not really so by any evidence or material which he could have investigated and ascertained before rejecting assessee s claim, what we have to consider is whether purchaser in open market will reckon on these amounts as part of assets of companies in offering price for shares. prudent purchaser will certainly not take into account amounts shown as doubtful recovery or not realisable in determining price to be offered for same and would exclude such amounts. Moreover, it is seen from order of AAC that provision of unrealisable debts was made because they were due from sick mills and also from companies who finances were in red. Whatever be position, as we have already noticed prudent purchaser would not take into account amount shown as doubtful of recovery or unrealisable and exclude them from total value of assets in fixing price of shares even under r. 1D. We, therefore, find no merit in Department s objections which are accordingly rejected. appeal is dismissed. *** ADDITIONAL WEALTH-TAX OFFICER v. M. RAMASWAMY