2003 (4) TMI 68 - HC - Income Tax

Gift Tax Act 1958 - deemed gift - There is a transfer of the membership by the appellant and his membership has been transferred at the consideration of Rs. 50, 000. When a valuable right or any interest in the property which has some value in terms of money if that right has been transferred for the consideration less than its market value that attracts the provisions of clause (a) of sub-section (1) of section 4 of the Gift-tax Act. 50 far as the market value is concerned learned counsel for the appellant has not disputed the market value of the membership which has been finally taken by the Tribunal. - no case is made out for admission of the appeal.

Summary

Issues involved:
1. Interpretation of provisions of the Wealth-tax Act and Gift-tax Act regarding appeal jurisdiction.
2. Taxability of transfer of membership of a stock exchange under the Gift-tax Act.
3. Assessment of market value and gift tax liability on transfer of membership.
4. Determination of whether membership of a stock exchange qualifies as personal property under the Gift-tax Act.
5. Interpretation of bye-laws of the stock exchange for gift-tax liability.
6. Validity of notice under section 16(1) of the Gift-tax Act for initiating proceedings.

Issue 1: Interpretation of provisions of the Wealth-tax Act and Gift-tax Act regarding appeal jurisdiction.
The counsel mistakenly referred to section 260A of the Income-tax Act instead of section 27A of the Wealth-tax Act for appeal jurisdiction in case of gift-tax. The amendment application was allowed, and the appeal was moved under section 27A of the Wealth-tax Act.

Issue 2: Taxability of transfer of membership of a stock exchange under the Gift-tax Act.
The questions raised included whether the transfer of membership amounts to a gift under the Gift-tax Act. The appellant transferred membership to another person, leading to the assessment of gift tax liability.

Issue 3: Assessment of market value and gift tax liability on transfer of membership.
The Gift-tax Officer assessed the market value of the membership based on an auction in 1991, leading to a deemed gift tax liability. The Tribunal modified the valuation, reducing the market value for tax assessment purposes.

Issue 4: Determination of whether membership of a stock exchange qualifies as personal property under the Gift-tax Act.
The appellant argued that membership is not property, citing a Supreme Court decision. However, the definition of property under the Gift-tax Act includes any interest in property, movable or immovable, which may attract gift tax liability.

Issue 5: Interpretation of bye-laws of the stock exchange for gift-tax liability.
The Tribunal interpreted the bye-laws of the stock exchange to determine gift-tax liability, sustaining the addition made by the Assessing Officer based on the transfer of membership.

Issue 6: Validity of notice under section 16(1) of the Gift-tax Act for initiating proceedings.
The initiation of proceedings against the appellant under section 16(1) of the Gift-tax Act was questioned for its validity in law. The court considered the law and facts of the case, ultimately dismissing the appeal at the admission stage due to the lack of a case made out.

This detailed analysis covers the interpretation of relevant legal provisions, assessment of tax liability, determination of property status, and the validity of proceedings under the Gift-tax Act. The court's decision was based on the facts presented, the application of law, and the arguments put forth by the appellant's counsel.