LAWS(DLH)-2018-1-651

COMMISSIONER OF GIFT TAX Vs. RAMESH SURI

Decided On January 16, 2018
COMMISSIONER OF GIFT TAX Appellant
V/S
Ramesh Suri Respondents

JUDGEMENT

(1.) In this appeal, the following questions of law arise for consideration:-

(2.) Brief facts are that the assessee purchased 17, 90, 700 shares of M/s Bharat Hotels Limited at Rs.25.70 per share. Purchase was from different companies controlled by family members as well as individuals, who formed part of the family. Apparently, a family dispute with respect to the control of the company M/s Bharat Hotels Limited and other properties was pending on the file of this Court in (Suit No. 516/1998). The share transfers were made pursuant to a family settlement arrived at by the disputing parties. The purchase was made by Sh. Ramesh Suri from the companies controlled by his brother G. Sagar Suri. Some shares were purchased from immediate family members of G. Sagar Suri. The entire transaction resulted in transfer of shareholding and controlling rights in respect of M/s Bharat Hotels Limited to Shri Ramesh Suri, including his family and his younger brother Shri Lalit Suri. These transactions were subject to income tax and gift tax proceedings. The Assessing Officer on the basis of the definition of the expression "transfer" under Section 2(24) of the Gift Tax Act, and upon an interpretation of Section 4 of the said Act, was of the opinion that the amounts paid in excess of the face value, were taxable under both the Income Tax Act and the Gift Tax Act. This was on the basis that these excess amounts were per se taxable under Section 4 and that the transfers fell within the definition of "transfer of property" under Section 2(24).

(3.) The CIT (A), however, reversed the order of the Assessing Officer holding that the transactions could not be characterized as a transfer that would attract the provisions of Section 4 of the Gift Tax Act. The ITAT endorsed this opinion, and also relied upon the judgment of the Gawahati High Court in Ziauddin Ahmed vs. Commissioner of Gift Tax, (1976) 102 ITR 25