COMMISSIONER OF GIFT TAX Vs. LAKSHMANA SARMA S

JUDGEMENT

(1.) THIS is a reference under Section 26(5) of the Gift-tax Act, 1958, at the instance of the Department. The following two questions of law have been referred to this court for its decision :

(2.) THE brief facts are ; the assessee is an individual. During the assessment year 1978-79, the accounting period ended on May 31, 1977, the assessee filed a return of income on July 20, 1978, declaring the value of taxable gift in respect of 72.1 cents of land at Rs. 39,260. THE assessing authority, namely, the Gift-tax Officer, in the course of the assessment, noticed that the assessee had during the previous year ended May 31, 1977, transferred at cost 17,500 shares out of 27,500 shares held by him in Kanthimathy Plantations to his close relations, namely, father, mother and brother. THE assessing authority also noted that the cost price per share was Rs. 6.05 and that the market value of the share on the date of transfer was Rs. 21.89. Before the assessing authority, the assessee contended that he purchased shares on behalf of the persons mentioned above. THE assessing authority did not accept the said contention of the assessee and brought the difference between the market value of the share, namely, Rs. 21.89, and the cost price, that is, Rs. 6.05, to get tax by resort to Section 4(1) of the said Act determining the value of gift at Rs. 2,77,200.

(3.) AGGRIEVED by the said order declining reference, the Revenue filed an original petition before this court for compelling the Tribunal to refer the said questions for decision by this court. This court in the said O. P. No. 10274 of 1987 by their judgment dated January 19, 1989, directed the Appellate Tribunal to refer questions numbers 1 and 3 (questions extracted hereinabove) for the decision of this court. The said judgment is reported in CGT v. G. Lakshmana Sarma [1989] 178 ITR 211.