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2001 (5) TMI 49 - SC - Income TaxWhether, on the facts and in the circumstances of the case, the Tribunal was right in law in coming to the conclusion that the difference of Rs. 8,21,950 on the sale of the jewellery by the assessee to its 12 wholly owned subsidiary companies was not liable to gift-tax under the provisions of the Gift-tax Act, 1958 ? Held that:- In the present case, the face value of the shares of the 12 fully paid subsidiary companies of the assessee was Rs. 5,69,400 which was taken to be the value of the jewellery that was transferred in exchange by the assessee to the subsidiary companies. The subsidiary companies had no other asset. The value of the jewellery as determined by the Assessing Officer being Rs. 13,91,350 the real value of the shares may be said to be Rs. 13,91,350, but there was thus no gift involved in the transaction for whatever is the value of the jewellery is in fact the value of the shares transferred in consideration. In the circumstances, the Assessing Officer committed an error in treating the transaction between the parties as a "deemed gift." The High Court was in error in holding that in the facts and circumstances of the case the transaction could be held to be a "deemed gift" within the purview of section 4(1)(a) of the Act and in holding the assessee liable for the tax. Accordingly, the appeal is allowed - the judgment of the High Court under challenge is set aside and the order of the Tribunal is confirmed. In favour of assessee.
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