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2015 (1) TMI 878 - HC - Income TaxDeemed gift - mode or manner of valuation of unquoted share - Interpretation of Section 4(1)(a) of the Gift Tax Act, 1958 read with Rule 10(2) of the corresponding Gift Tax Rules - proceedings u/s.144B read with Section 144(3) by the IAC accepted - Held that:- Tribunal ought not to have considered it as Gift and should have accepted the valuation put forth by the assessee. In view of the above, the question no.1 as to whether the Tribunal is right in law in its interpretation of Section 4(1)(a) of the Gift Tax Act, 1958 read with Rule 10(2) of the corresponding Gift Tax Rules is answered in favour of the assessee. Tribunal has erred in applying the Gift Tax Rules for the purpose of assessment of deemed Gift under the Gift Tax Act in spite of the fact that Wealth Tax Rules are meant for notional depressed valuation in certain situations whereas, the Gift Tax provision pertaining to deemed Gift has direct nexus with the under-valuation of the market value of the property sought to be transferred. When the mode or manner of valuation of unquoted shares has undergone changes from time to time on the basis of judicial pronouncement and / or legislative changes, can it be said that appellant had made "deemed gift" with a view to avoiding tax when the sale effected by the appellant is at a value higher than that worked out by approved registered valuer but accepted under the Income-tax proceedings u/s.144B read with Section 144(3) by the is concerned, the same is answered in favour of the assessee. - Decided in favour of assessee.
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