COMMISSIONER OF GIFT TAX Vs. VENU SRINIVASAN S

JUDGEMENT

(1.) WE deal with these two cases under a common judgment because the questions that have been referred to us by the Tribunal in these cases raise similar if not identical questions for decision. WE shall extract the questions in the two cases: T. C. No. 588 of 1975

(2.) THE year of assessment in T.C. No. 588 of 1975 is 1971-72 and that in T.C. No, 595 of 4975 is 1973-74. Two gift deeds are the subject-matter which gave rise to these references, one dated March 22, 1971, in the earlier case and the other dated March 28, 1973, in T.C. No. 595 of 1975. THEse gifts dealt with shares in M/s. T. V. Sundaram Iyengar & Sons (P.) Ltd. It will be noticed that the gift deeds were executed almost at the end of the years 1970-71 and 1972-73. THE assessees seem to have proceeded on the basis that the value shown in the balance-sheet as the value of the share for the year ending 1970-71, for T.C. No. 588 of 1975 and that shown in the balance-sheet tot the year 1972-73, for T.C. No. 595 of 1975 minus 15 per cent. would be the value the shares would fetch if sold in the open market. On that basis, the returns were filed. So, in T.C. No. 588 of 1975, the value of the share was shown as Rs. 113.29 and in T.C. No. 595 of 1975 as Rs. 117.78 by the assessees. On second thoughts as it were, the assessees wanted to have the value reduced further on the basis of issue of dividend by the company after the previous balance-sheet and claimed that the value of the share for the assessment year 1971-72, in T.C. No. 588 of 1975 must be fixed at Rs. 107.34 and that with which we are concerned in T.C. No. 595 of 1975 at Rs. 107.58. We may mention here that the value of the share as shown in the balance-sheet for the year 1971-72, as on March 31, 1972, for T.C. No. 588 of 1975 is Rs. 134.82 and the corresponding figure for the year 1973-74, for T.C. No. 595 of 1975 is Rs. 133.63. THE Tribunal considered the question whether the shares should be valued at Rs. 107.34 or Rs. 134.82 in the order under appeal which gave rise to T.C. No. 588 of 1975 and considered the similar question in the order which gave rise to T.C. No. 595 of 1975 as to whether the value should be Rs. 107.58 or Rs. 133.63 per share and came to the conclusion that the shares should be valued at the lower figures that we have mentioned earlier. A reference has been made at the instance of the revenue and it was contended before us that the Tribunal has erred in applying the lower figures and the value of the shares should have been fixed at the higher figures. We shall now turn to the statutory provisions in the Gift-tax Act and the Rules. Section 6 dealing with the method of determination of value of gifts is in these terms :

(3.) THE question whether the value given in the balance-sheet as existed at the time of the gift deeds should be taken as the market value and if so, what depreciation, if any, should be made on those figures are matters which have to be decided by the Tribunal after taking into consideration all the relevant factors. We are, therefore, unable to answer the questions that have been referred to us and in view of the fact that the Tribunal has not considered these matters before passing the orders in the cases, we consider that we should adopt the principle that was adopted by the Supreme Court, in dealing with references under the Income-tax Act, in the decisions of the Supreme Court in Commissioner of Income-tax v. Greaves Cotton and Co. Ltd. and Commissioner of Income-tax v. Indian Molasses Co. P. Ltd. [1970] 78 ITR 474. Accordingly we direct the Tribunal to take back G.T.A. No. 83 (MDS)/73-74 and G.T.A. No. 25/ 74-75 on its file and deal with them afresh after issuing notice to the parties concerned and dispose of those appeals in the light of what is stated in this judgment. We order these two references in the above terms. We direct the parties to bear their respective costs. THE costs hereafter incurred will be provided for by the Tribunal.