K C MAMMEN Vs. COMMISSIONER OF GIFT TAX

JUDGEMENT

(1.) The Income Tax Appellate Tribunal, Cochin Bench has referred the following question of law for decision by this Court under S.26(1) of the Gift Tax Act (for short "the Act") at the instance of the assessee:

(2.) The brief facts are as follows: The assessee, an individual, held shares in Malayala Manorama Co. Ltd. During the previous year relevant to the assessment year 1991-92, the valuation date 31.3.1991, the assessee sold 9640 shares of the said Company to his close relatives at a value of Rs.37/- per share. The Assessing Officer noticed that during the previous year relevant to the assessment years 1991-92 the assessee had gifted away 280 shares in the same company to his minor daughter and for the purpose of gift tax he valued the shares at Rs.77.85 per share. Since the assessee had sold the other shares in the same previous year, the Assessing Officer took the fair market value of the shares at Rs.77.85/- per share and on that basis he came to the conclusion that there was a gift involved in the sale to the extent of Rs.3,93,794/- and the same was assessed to tax under the Act as deemed gift. The Commissioner of Income Tax (appeals) confirmed the assessment holding that the market value of the shares was to be taken at Rs.77.85/- per share in accordance with Schedule III of the Wealth Tax Act. This was confirmed by the Tribunal in further appeal by the assessee.

(3.) The assessee then filed a Miscellaneous Petition, M.P. No.118/Coch./98 stating that a particular ground, namely, the applicability of S.4(1)(a) of the Act in respect of the transaction in view of the restrictions contained in the Articles of Association of the Company which issued shares to the assessee. The Tribunal, after considering the matter, rejected the said petition stating that there is no mistake in the order. It is, thereafter, the petitioner has filed an application against the order in GTA No.25/Coch./94.