TMI Blog1981 (11) TMI 72X X X X Extracts X X X X X X X X Extracts X X X X ..... rected that the value of the shares should be taken at Rs. 1,272 per share as declared by the assessee. On a further appeal by the Revenue before the Tribunal, The Tribunal in GTA No. 7 (Bom)/1973-74 dt. 6th February-1973-74 AAC. The Tribunals decision has become final as there is no reference before the High Court against the Tribunal's decision. In this order, the Tribunal has accepted in principle that the break-up value of the shares worked out in accordance with Wealth-tax r. 1-D should be adopted for the purpose of determining the value of the shares for the gift-tax assessment also. 3. After the completion of the original assessment on 30th September 1972, the GTO came across a circular issued by the CBDT bearing P.No. 342-7-74 GT issued on 29th October 1974. In the circular the Board had directed that as the language of GT r. 10(2) was identical to s. 37 of the ED Act, the valuation of the shares u/r 10(2) of the Gift-tax will be governed by the Board's letters dt. 3rd March 1965 and 5th July 1965, which prescribed the method of valuation of shares u/s of the ED Act. The GTO there fore reopened the gift-tax assessment u/s 16(1)(b) of the GT Act. The assessee filed a fres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eals) dismissed the appeal filed by the assessee as to the legality of the reassessment proceedings. 5. The CGT (Appeals), however, agreed with the assessee that the GTO had added to the value of the share capital reserve and surplus, the good will worked out for the five years average and thus enhanced the valuation of the shares to Rs. 2,655 per share. According to the CGT (Appeals), considering the nature of instructions contained in the various circulars of the Board, the absence of any specific direction regarding the manner in which the shares should be valued for the purpose of gift-tax assessment in any of the circulars issued by the Board, the findings given by the Tribunal regarding the valuation of the shares in this very case for this very assessment year, which finding has become final and the principles laid down by the Supreme Court in the case of CGT vs. Kusumben D. Mahadevia (1980) 14 CTR(SC) 366 : (1980) 122 ITR 38 (SC), the valuation made by the GTO was incorrect and had no basis whatever. He therefore, directed the GTO to levy gift-tax in accordance with the original assessment and to refund the additional gift-tax if charged. 6. In the appeal filed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Appeals). This has been reproduced by the CGT (Appeals) in paragraph 3 of his order. According to this circular also, the goodwill was not required to be taken into consideration while valuing the shares, Reference was also made to a number of decisions of the Tribunal where in the Tribunal has taken the view that for valuation for the purpose of administration of GT Act, r. 1-D or the WT Rules should be followed. In particular, reference was made to the IT Appellate Tribunal, Bombay Bench 'D' decision dt. 17th October 1980 in GTA Nos.33,35,36 and 37 (Bom) 1979 in case of the 1st GT, D-Ward, Bombay vs. Shri X, wherein the Tribunal, Bombay Bench 'D' of which one of the Members was common, viz. the judicial member, has taken the same view. The relevant portion from that decision reads us under: 2. These are appeals field by the Revenue and the point taken up in the ground of appeal is: On the facts and in the circumstances of the case and in law the ld. CIT (Appeals) erred in directing that the market value of the unquoted equity shares gifted should be valued as per r. 1-D of the WT Rules ignoring the provisions of r. 10(2) of the Rules framed under the GT Act, 1958. Straig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eated as 'information' within the meaning of s. 147(b). According to the ld. Counsel the Board stood on no higher footing than the audit authorities in this respect. 9. In reply. The ld. Deptl. Rep. Has referred us to the Gujarat High Court decision in the case of CIT vs. Maneklal Harilal Spg. Mfg. Co. Ltd. (1977) 106 ITR 24 (Guj) according to which the Supreme Court decision have no retrospective operation. What we are concerned with, is the state of law as interpreted by the ld. judges of the Supreme Court at the relevant time when the GTO took action. 10. We have carefully considered the facts and circumstances of the case. For the purposes of the original assessment made by the GTO, the valuation of the shares declared by the assessee was at Rs. 1,272 per share. the GTO valued the shares at Rs. 1,286 per share. The AAC restored the valuation to Rs. 1,272 per share. The Tribunal confirmed the same. The GTO has sought to reopen the assessment on the basis of Board's which was permissible for the GTO to reopen such assessment u/s 16(1)(b) of the GT Act, on the ground that Board's instruction dt, 29th October 1974 constituted information within the meaning of s. 16(1)(b) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plained by the ld. Judges of the Mysore High Court in the case of CED v. J. Krishnamurthy(1974) 96 ITR 87(Mys) and as held by the IT Appellate Tribunal, Bombay Bench 'D' in GTA Nos.33,35,36 and 37 (Bom)/1979, it would be safer to follow WT r. 1-D for the valuation of unquoted shares even for the purpose of levy of gift taxes for the ED Act. We would prefer to follow the Mysore High Court decision in preference to the Calcutta High Court decision relied upon the Deptl. Rep. There is no dispute between the parties before us that the assessee had correctly valued the shares at Rs. 1,272 per share by any method other than W.T r. 1-D. In the circumstances, once it is accepted that this valuation at Rs. 1,272 per share has been properly made under WT r. 1-D, we are of the view that that should be the valuation for the purpose of the present Gift-tax assessment. Even, on merits, therefore, the Revenue has no case. 12. We have also considered the Gujarat High Court decision in the case of Maneklal Harilal Spg. Mfg. Co. Ltd. (1977) 106 ITR 24 (Guj) relied upon by the Deptl. Rep. But that decision has no application to the facts of the present case. 13. In the result, the appeal file ..... X X X X Extracts X X X X X X X X Extracts X X X X
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