COMMISSIONER OF GIFT TAX Vs. SHANKUNTALA DEVI

JUDGEMENT

(1.) THE Tribunal has referred the following question for the opinion of this Court :

(2.) THE relevant facts may be briefly noticed. On 20th March, 1979, the assessee sold 250 shares of Kakkar Steel Complex (P) Ltd. to Naval Kumar and Vipan Kumar for a consideration of Rs. 2,50,000. Each share had a face value of Rs. 1,000. The IAC vide his assessment order dt. 5th March, 1993, held that "the market value of the shares even if worked out with yield method would not be less than Rs. 2,199 per share." Thus, she came to the conclusion that the shares had been "transferred for a consideration, which is much below the market value." As a result, she held that "gift -tax under S. 4(1)(a) is attracted." Thus, the assessee was held liable to pay gift -tax. The assessee filed an appeal before the CGT(A), Jalandhar. The plea of the assessee that the valuation of the shares should have been fixed with reference to the balance sheet available on the date of sale, viz., 20th March, 1979 and not with reference to the balance sheet of a later date was accepted. It was held that the sale having taken place on 20th March, 1979, the value of the shares had to be fixed with reference to the balance sheet as on 31st March, 1978, and not as on 31st March, 1979. The GTO was accordingly directed to determine the element of gift and tax due on the hypothesis that the value of each share was Rs. 1,115. The Revenue challenged the order of the CGT(A) before the Tribunal. It contended that the sale transaction had taken place on 31st March, 1979, and thus, the value of each share had to be fixed on the basis of the balance sheet as on 31st March, 1979. The Tribunal on a consideration of the matter held that the sale had taken place on 20th March, 1979. It upheld the order of the CGT(A) and dismissed the appeal filed by the Revenue. While doing so, the Tribunal placed reliance on its earlier decision in the case of CGT vs. Ripan Kumar. Aggrieved by the order, the Revenue made a petition for reference. It was allowed. It is in these circumstances that the present reference has been made to this Court.

(3.) SHRI Sawhney, learned counsel for the Revenue, has vehemently contended that the view taken by the Tribunal is erroneous. The AO had rightly determined the value of the shares on the basis of the balance sheet as on 31st March, 1979.