TMI Blog1982 (7) TMI 154X X X X Extracts X X X X X X X X Extracts X X X X ..... 74. Similarly, 300 shares of the same company were gifted on the same date to his son M. R. Ganganna. On 17-1-1974 the assessee gifted 350 shares in Nippon Electronics (India) (P.) Ltd., to M. R. Gangadhar. The value of the shares for gift-tax purposes was computed by the assessee in terms of rule 1D of the Wealth-tax Rules, 1957. The value arrived at was Rs. 213 per share for the shares in Stumpp, Scheule Somappa (P.) Ltd., and Rs. 131 for the shares of Nippon Electronics (India) (P.) Ltd., against the face value of shares in each case of Rs. 100. In terms of rule 1D, the relevant rule under the Wealth-tax Rules, 1957, the break-up value of the shares was determined according to the figures as appearing in the balance sheet and in the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ket value of the assets and not the book value of the same. He accordingly made two adjustments in the assets namely an upward revision in respect of the value of land and building in each case and further an addition on account of goodwill taken at 3 years purchase in each case. In the case of land and building the upward revision was by Rs. 1.89 lakhs, in the case of Stumpp, Scheule Somappa (P.) Ltd., and Rs. 3.89 lakhs in the case of Nippon Electronics (India) (P.) Ltd. The value taken for goodwill in the case of Stumpp, Scheule Somappa (P.) Ltd., was Rs. 9.63 lakhs and in the case of Nippon Electronics (India) (P.) Ltd. Rs. 6.73 lakhs. After making adjustments in respect of these revisions to the figures as appearing in the balance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... valuation which would prevent any reasonable estimation of the profit-earning capacity of the company. The Commissioner then stated that though it may be true that in the case of Kusumben, the contention of the revenue that under rule 10(2) of the Gift-tax Rules the break-up method was the primary method to be adopted was not pronounced upon by the Supreme Court, still the plea of the revenue that the break-up value alone should be taken was not acceptable. The Commissioner finally directed that the shares should be revalued according to the principle enunciated by the Supreme Court in the case of Kusumben and such value should be taken as the value of the gift as against the break-up value as determined by the GTO as mentioned. 5. The r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alue in certain cases which has to be fixed. He, therefore, submitted that this is a case where the value of shares could not be ascertained with reference to the total value of the assets. The learned counsel also submitted that it was well known that where there were restrictive provisions in the matter of transfer of shares of companies and large discount had to be given and this principle received judicial recognition in the decision of the Madras High Court in the case of CGT v. S. Venu Srinivasan [1978] 112 ITR 771. He, therefore, submitted that the finding of the Commissioner (Appeals) was unexceptionable when the provisions of rule 10(2) were not applicable. 6. We have considered the rival submissions. We have given anxious consid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ple from the break-up value and no such discount has been given by the GTO and even the value as computed under the Wealth-tax Rules does not provide for such discount. Therefore, the case goes outside the purview of rule 10(2) and the market value of the shares would have to be determined. When we come to the aspect that it would be the market value of the shares that will have to be determined, then the ratio of the Supreme Court in the case of Mahadeo Jalan as reiterated in the case of Kusumben becomes applicable. The Commissioner (Appeals) has only directed that the value of the shares should be computed in accordance with such principles. The decision of the Commissioner (Appeals) is, therefore, unexceptionable and accordingly the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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