grounds of appeal raised by assessee in all these appeals are common. They were, therefore, heard together and are disposed of by combined order for sake of convenience. 2. short controversy raised in these appeals is in regard to interpretation of rule 1D of Wealth-tax Rules, 1957 (' Rules '), and whether while working out value of shares in terms of rule 1D, i.e., in accordance with break-up value method, taxation liability not provided for in accounts by company, should also be taken into consideration and treated as debt on valuation date. 3. assessee held 540 shares, inter alia, of S.S. Jaiswal (P.) Ltd. valuation date of assessee is 31st March of every year. company, viz., S.S. Jaiswal (P.) Ltd., in which assessee held aforementioned number of shares, also closes its accounts on 31st March every year. In respect of valuation dates 31-3-1973 and 31-3-1974, assessee's valuer worked out value of aforementioned shares at Rs. 461.05 and Rs. 726.40 per share, respectively. WTO, however, has adopted valuation at Rs. 750 and Rs. 1,600 per share, respectively. Details of working of aforesaid valuations have not been given by WTO along with his assessment orders. But, as can be understood from grounds of appeal and arguments put forward by assessee's learned counsel, dispute with regard to valuation centres round only one point, viz., whether or not provision for taxation for accounting years ending 31-3-1973 and 31-3-1974, not provided for by said company in its accounts, should be taken into account for purpose of valuation. From auditors' Note No. 7, given on face of balance sheet for accounting year 31-3-1975, it appears that estimated aggregate amount of taxation not provided for by company for aforesaid assessment year was Rs. 13,20,000. According to said auditors, to extent of such non- provision for year, profits of company for financial year under report have been overstated and to extent of such non-provision, general reserve and provisions of company appearing in balance sheet as at 31- 3-1973 are overstated and understated, respectively. 4. In respect of accounting period ending 31-3-1974, similar note has been given by auditors being Note No. 2. It reads as follows: " company has not provided for taxation in respect of its profits and estimated aggregate amount of taxation not so provided for is Rs. 45,29,000 (including surtax-Rs. 5,66,000). To extent of such non-provision for year, profits of company for financial year under report have been overstated and to extent of such non-provision, general reserve and current liabilities and provisions of company appearing in balance sheet as at 31st March 1974, are overstated and understated, respectively." 5. According to assessee's learned counsel, aforesaid provision for taxation, amounting to Rs. 13,20,000 for valuation date 31-3-1973 and Rs. 45,29,000 for valuation date 31-3-1974, should be taken into account for purpose of valuing shares of company, S.S. Jaiswal (P.) Ltd. assessee's valuer has taken aforesaid liabilities into account and has thereby worked out valuation for 31-3-1973 at Rs. 461.05 per share and for 31-3- 1974 at Rs. 726.40 per share, as noted above. contention of assessee's learned counsel is that notes of auditors should be taken as part of balance sheet, as they indeed are, and even though in balance sheet proper provision has not been made, same should be taken into account as auditors have brought out taxation liability and, undoubtedly, said taxation liability is debt owed by said company on valuation dates in question and, therefore, there is no question of said figures not being taken into account on ground that no provision for same has been made in balance sheet. balance sheet does not only mean figures appearing in main body of balance sheet but such other information as is given in notes by auditors as part of audit report also forms part of balance sheet and correct way of reading balance sheet, according to learned counsel, was to modify figures of balance sheet by notes of auditors and such modified figures should form basis of computation of valuation of shares, according to break-up value method. 6. It is also urged by assessee's learned counsel that rule 1D was not mandatory and that it " as merely directory and that it broadly indicated principles to be followed for working out valuation and even according to method indicated by it, provision for taxation had to be treated as liability of company and should be deducted from aggregate value of assets to arrive at value of shares of said company. said rule, according to learned counsel, did not say that liability not provided for in accounts should be ignored. What it says is that liability provided for in accounts should be taken into account. aforesaid positive direction could not be read as laying down negative of it as rule, viz., if liability is not provided for, it should not be deducted from aggregate value of assets to find out break- up value of shares. 7. On behalf of revenue, order of learned AAC is stoutly supported and it is urged that reading of rule 1D would make it clear that valuation of shares has to be made on basis of balance sheet of company and if figure was not included in balance sheet, it could not be taken into account, howsoever real figure might be. 8. We have given careful consideration to facts of case and rival submissions. argument of learned counsel for assessee that rule 1D was not mandatory but only directory, does not arise from grounds of appeal nor is it germane to decision of grounds of appeal raised by assessee. dispute raised by assessee either before us or before lower authorities was not as to whether break-up value method, as indicated by rule 1D, should or should not be adopted for valuing shares of aforementioned company, but as to how said break-up value should be determined. assessee's valuer had himself worked out value of shares in accordance with principles enunciated in rule 1D and assessee's grievance before us, as it was before learned AAC, is that valuation worked out by WTO in terms of rule ID was incorrect and that correct valuation of said shares on basis of break-up value method would be, what valuer of assessee had worked out. question that rule 1D was not mandatory but was directory in light of ratio of decision of Hon'ble Bombay High Court in case of Smt. Kusumben D. Mahadevia v. N.C. Upadhya [1980] 124 ITR 799 does not, therefore, arise for determination in present appeals and is not necessary for disposal of appeals presently under consideration. We will, therefore, express no opinion on this general issue under consideration. We will, therefore, express no opinion on this general issue and leave it to be determined in appropriate case as and when it arises for determination. 9. real controversy as noted earlier is whether while working out valuation in terms of rule 1D, liabilities for income-tax and surtax not provided for by company, S.S. Jaiswal (P.) Ltd., should be taken note of while working out value of shares of said company on break-up value method. It is not disputed by revenue that in principle, said liability for taxation on respective valuation dates is debt owed by said company and that it should, therefore, be deducted from aggregate value of assets for finding out actual break-up value of shares. It is also not disputed by revenue that, not only according to general principle of break-up value method, aforesaid provision for taxation should be deducted, but that was specific provision built in into rule 1D in terms of sub-clause (e) of clause (i) of Explanation II to said rule 1D, whereby taxation provision on book profits of company has to be treated as liability and if there is any excess provision, such excess alone has not to be treated as liability. In view of this, it is not in controversy that if liability for taxation on book profits had been provided for by assessee-company in accounts, same would have been deducted by WTO, while working out value of shares. Similarly, if rule 1D was not there and valuation had to be arrived at in accordance with principles given by CBDT in its Circular No. 3(WT), dated 28-9-1957, deduction for provision of taxation on book profit, as it appears to us, would have been allowed as deduction from aggregate value of assets to find out break-up value of shares. moot question, therefore, which arises for consideration, is whether said liability, though real and admittedly deductible from net value of assets in accordance with principles of break-up value method, should not be deducted from value of shares only because directors, while finalising balance sheet of company, did not provide for taxation liability in balance sheet. After carefully considering facts of case, we are of opinion that if deduction for taxation liability is not made, as suggested by revenue, distorted value of shares would be arrived at, which would not be in accordance with essential principles of rule 1D. What has to be found out is real break-up value of shares, and in order to find out this, it is impossible to visualise situation, where considerable debt b y way of taxation, which is incurred by company on last day of accounting year, would not be deducted. Rule 1D never intended to give such distorted picture. best thing, therefore, is to interpret it in such manner as will avoid such distorted view of reality. In these circumstances, we feel that there is merit in contention of learned counsel for assessee that balance sheet of company has to be read in its entirety and that it would not be proper to read only figures part of it to exclusion of comments of auditors. Any intending purchaser of shares would look, not only at figures mentioned in balance sheet but also at notes given by auditors and if all facts are taken into account, in our opinion, no manner of doubt would be left in mind of intending purchaser that real break-up value of shares, in his opinion, would not be what would be arrived at by deducting aggregate of liabilities as per balance sheet from aggregate of assets as per balance sheet. In order to find out real picture, item of debt in form of taxation liability, which has not been provided for in accounts, but which has been highlighted by auditors by way of their note, would also be taken into consideration to ascertain break-up value of shares. role of auditors' note is to give real picture of company's affairs. Rule 1D, no doubt, makes balance sheet as basis for working out break-up value of shares, but it nowhere stipulates that if liability, like one under consideration, has not been provided for in directors' report but is highlighted by auditors in their note, which becomes part of balance sheet itself, because note appears on face of balance sheet, said liability should not be taken into account. In fact, rule 1D is silent about this and there is no prohibition against it in said rule. If, at all, principles enunciated in said rule clearly indicate that liability for taxation on book profits should be regarded as liability, which has to be deducted from aggregate value of assets for finding out break-up value. Not doing so, would, in our opinion, be going against principle of rule 1D and would be misapplication of said rule to given facts in present case. As such, we accept assessee's submissions in this regard and direct that liability for taxation on book profit should be worked out by WTO and should be deducted from aggregate value of assets in respect of two valuation dates referred to above, namely, 31-3-1973 and 31-3-1974, and after deducting said liability, value of shares should be recomputed. 10. It was conceded by assessee's learned counsel that aforementioned controversy does not arise in respect of assessment years 1975-76, 1976-77 and 1977-78, because in balance sheet for 1975-76, liability for taxation on book profits, which had not been provided for earlier in accounting period ended on 31-3-1973 and 31-3-1974, was provided for and that WTO had taken that into account. In view of this' appeals for assessment years 1975-76 to 1977-78 have no merit and are hereby dismissed, whereas appeals for assessment years 1973-74 and 1974-75 have merit and are, therefore, hereby allowed. *** SMT. PRAMILA DEVI JAYASWAL v. WEALTH-TAX OFFICER