COMMISSIONER OF GIFT TAX Vs. RIPAN KUMAR

JUDGEMENT

(1.) THE CGT, Jalandhar has approached this Court with a prayer for adjudication on the following question of law: Whether on the facts and in the circumstances of the case, the Tribunal was right that in valuing the unquoted shares of M/s Kakkar Complex (P) Ltd. for the purposes of working out the value of the deemed gift on 20th March, 1979 and 31st March, 1979, reference should be made to the balance sheet of the said company as on 31st March, 1978 and not with reference to the balance sheet as on 31st March, 1979?

(2.) IT has been claimed that the aforementioned question has arisen out of the order of the Tribunal dt. 6th Feb., 1984 rendered in GT Appeal No. 3 of 1983.

(3.) THE Revenue felt aggrieved and challenged the order of the CGT(A) before the Tribunal. However, the Tribunal upheld the finding of the CGT(A) and dismissed the appeal of the Revenue as is evident from the perusal of para 4 which reads thus: We first take up the appeal of the Revenue for disposal. We are not moved by the plea that it was a transaction of sale only and there is no element of gift involved in it, because the sale was made to the members of the family. The respondent assessee has not been able to rebut this presumption that the sale of shares at Rs. 1,000 per share could be made only to a member of the family and not to a third party. If there had been any sale made to a third party at Rs. 1,000 per share, the assessee could have controverted the plea that the sales to the members of the family were not coloured by the element of personality. But, having rejected the plea of the assessee, that the transaction was one relating to the sale, which had no element of gift involved in it, we cannot accept the contention of the Departmental Representative that the CGT had misdirected himself in working out the break up value with reference to the balance sheet as on 31st March, 1978 and not with reference to the balance sheet as on 31st March, 1979. No doubt, he supported his plea with the Madras High Court decision in CGT x K. Ramesh : [1983]141ITR462(Mad) . Kerala High Court, on similar facts, have held out in CGT v. H.H. Sethu Parvathi Bai : [1984]145ITR124(Ker) that in valuing the shares, the provision contained in Expln. (1) could not be ignored. According to the provision, the balance sheet to be referred to was that which was available on that date, either indicating the assets and liabilities as on the date of sale or the one indicating the position of assets and liabilities on a transfer prior to the date of the transaction. One balance sheet which was here available on 23rd March, 1979 was the balance sheet relating to the date, which fell on 31st March, 1978. It was only with reference to this balance sheet that the two parties concerned with the sale, could have reached a finding about the valuation of the shares. Accordingly, following one of the two views, the Kerala view favourable to the assessee, we find no error in the finding of the CGT(A) who had reached a break up value of the shares with reference to the balance sheet as on 31st March, 1978. We accordingly, uphold finding of the CGT(A) and reject the plea of Revenue to the contrary as of no substance and merit.