TMI Blog1985 (6) TMI 14X X X X Extracts X X X X X X X X Extracts X X X X ..... introduced a Bill for diffusion of ownership in newspaper industry which sought to limit the holdings of a director and his relations to 5% of the total share capital. The Gift-tax Officer, however, held that there was no valid basis for estimating the value of the shares at their face value. Noticing the value of the assets of the company, the Gift-tax Officer determined the value of the gifted shares as Rs. 73,089 at the rate of Rs. 40.25 per share, that being the value arrived at on the basis of the last balance-sheet. Determining the taxable turnover (market value) to be Rs. 73,000 by his order dated November 30, 1973, the Gift-tax Officer levied a tax of Rs. 7,464. Annexure A is a copy of that order. Annexure B is the copy of the memor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ldings of an individual to 5% with a view to bring about workers' participation in the industry. After having considered this and other salient features of the proposed legislation, the Tribunal took the view that the legislation under contemplation had the effect of depressing the value of the shares and accordingly held that it would be proper to fix the value of the gifted shares at Rs. 30 per share. Aggrieved by the order of the Tribunal dated February 28, 1976, an application for reference of the questions of law involved was made before the Tribunal by the Revenue. The Tribunal having rejected the reference application at the instance of the Revenue by order dated August 21, 1976, a copy of which is annexure H, the Commissioner of Gif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tirely omitted from consideration in their orders? 5. On the facts and in the circumstances of the case, whether the orders of the Tribunal are not vitiated by the fact that there is no evidence at all in support of the conclusion that the prices of the shares of Malayala Manorama Co. Ltd. had fallen; and 6. On the facts and in the circumstances of the case, whether the Tribunal was justified in reducing the value of the shares to Rs. 30 per share in the place of the value of Rs. 40.25 per share arrived at in accordance with rule 1D ? The main question that falls for decision is whether the Appellate Tribunal acted in accordance with law in fixing the share value at Rs. 30 after having discussed the possible impact a structural change ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is relevant being the value of unquoted shares, the value has to be estimated by the Gift-tax Officer by finding out what price they would fetch if sold in the open market on the date on which the gift was made. We have not been shown any rule under the Gift-tax Act prescribing the manner in which the value of gifts is to be estimated or determined. All the same, under the sister law pertaining to wealth-tax, rules have been framed and for all practical purposes that method would hold good in determining the value of gifts for the purposes of the Gift-tax Act. This court in CWT v. Mamman Varghese [1983] 139 ITR 351 (Ker), has taken the view that the Appellate Tribunal might not have interfered with the valuation made by the Wealth-tax O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the valuation for purposes of estate duty also." It has been held by a Division Bench of the Madhya Pradesh High Court in Shyamsukh Garg v. Controller of E. D. [1984] 145 ITR 238, that in the absence of any contrary provision, principles laid down by rule I of the Wealth-tax Rules could be taken into consideration for valuation of unquoted shares for the purpose of section 37 of the Estate Duty Act. We are broadly in agreement with the views expressed by the Mysore and Madhya Pradesh High Courts and what is said of the valuation for the purpose of the Estate Duty Act in those cases could be appropriately applied to cases relating to valuation for the purpose of the Gift-tax Act. The Supreme Court in CWT v. Mahadeo Jalan [1972] 86 ITR 62 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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