COMMISSIONER OF GIFT TAX Vs. NALINI SRINIVASAN

JUDGEMENT

(1.) PURSUANT to the directions of this court under section 26(3) of the Gift-tax Act, 1958 (hereinafter to be referred to as "the Act"), in T.C.P. Nos. 270 to 272 of 1982, dated April 4, 1983, the Appellate Tribunal has stated a case and referred the following common question of law with reference to three assessees who are respondents before us for our opinion :

(2.) THE assessees are the owners of certain shares in some private limited companies known as Southern Roadways Private Limited and Sundaram Industries Private Limited. THE Gift-tax Officer in the original assessment made on the assessees for the assessment year 1974-75 adopted the value of the shares adopting the principles of valuation stipulated under rule 1D of the Wealth-tax Rules, 1957. THE Gift-tax Officer, adopted the provisions of 1D of the Wealth-tax Rules on the basis of the circular issued by the Central Board of Direct Taxes dated March 26, 1968. Subsequently, the Gift-tax Officer came to know about the Board's circular dated October 29, 1974, issued on the same subject of valuation of shares for gift-tax purposes and the said circular of the Board directed the Assessing Officer to adopt the provisions of rule 10(2) of the Gift-tax Rules for valuation of the shares for the purpose of gift-tax. THE relevant portion of the Board's circular dated October 29, 1974, reads as under :

(3.) MR. Janarthana Raja, learned counsel for the assessee, on the other hand, submitted that the Tribunal has given a categorical conclusion that there was no information before the Gift-tax Officer that the market value of the assets of the company was higher than the value shown in the balance-sheet and in view of the finding of the Appellate Tribunal that there was no information before the Gift-tax Officer that the taxable gift had escaped assessment, the Appellate Tribunal has come to a correct conclusion in holding that the provisions of section 16(1)(b) of the Act were not attracted on the facts of the case.