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Jagan Nath Syal (Deceased) Versus Commissioner of Gift Tax

2015 (8) TMI 180 - DELHI HIGH COURT

Holding share in the DSE as also membership of DSE - whether were property/assets and transfer thereof was exigible to tax under the Gift-tax Act, 1958? - Whether the Tribunal was justified in opining that composite value of share and ticket was to be adopted? - Held that:- In view of the settled legal position as decided in Stock Exchange, Ahmedabad v. ACIT (2001 (3) TMI 2 - SUPREME Court), Techno Shares and Stocks Limited v. ACIT (2010 (9) TMI 6 - SUPREME COURT OF INDIA ), Vinay Bubna v. Stock .....

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he Gift Tax Act, 1958. Membership of the stock exchange is in the nature of personal permission and is not a tangible asset.

The second question is answered in the negative. It is accordingly held that the ITAT was not justified in adopting the composite value of the share as well as the ticket for the purpose of gift tax. This Court is not called upon to examine the correctness valuation of the shares transferred by the assessee in favour of his son for the purposes of gift tax. - GT .....

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and in law the Tribunal was justified in holding that a share in the DSE as also membership of DSE were property/assets and transfer thereof was exigible to tax under the Gift-tax Act, 1958? (2) Whether on the facts and circumstances of the case and in law the Tribunal was justified in opining that composite value of share and ticket was to be adopted? 3. The Assessee filed its income tax return declaring a gift of ₹ 2,85,504. This pertained to the gift of one share of the Delhi Stock Exch .....

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4. The appeal of the Assessee was rejected by the Commissioner of Gift-Tax (Appeals) [ CGT (A) ] and the further appeal filed before the Special Bench, ITAT was disposed of by its order dated 8th November 1999 upholding the order of the CGT (A). Thereafter, a reference was sought and the above questions framed by the Special Bench, ITAT. 5. On the first question, learned counsel for the Assessee first referred to the Memorandum and Articles of Association ( AoA ) of the DSE to urge that members .....

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the DSE. It shows showed that the issue and transfer of shares has been dealt with separately and differently from the membership of the stock exchange. Article 18 of AOA states that the Board shall not register any transfer of any share(s) to any person other than a member of the stock exchange or a candidate for membership who has been duly elected as eligible for membership under the provisions of Article 25 and the Board may refuse to register any transfer or shares(s) to an existing member .....

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the AoA. Article 24 of the AoA pertains to membership of the stock exchange and describes further conditions to be satisfied before a share holder can become a member. These conditions are further enumerated in Article 25. The procedure with regard to enrolment, admission or election of new members of the stock exchange is set out in Article 26. Article 34 states that membership shall not be transferable except in accordance with the rules. Article 43 talks about the termination of the membersh .....

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ds distributed amongst his creditors. Subsequently, a similar question was addressed by the Supreme Court in Stock Exchange Ahmedabad v. ACIT (supra). On analysis the bye-laws of the stock exchange, which is more or less similar to the rules of the DSE, the Supreme Court concluded that it is clear that the right of membership is merely a personal privilege granted to a member, it is non-transferable and incapable of alienation by the member or his legal representatives and heirs except to the li .....

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