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TMI Blog2018 (3) TMI 86X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. The brief facts are that the assessee/appellant was allotted 1960 shares in M/s Dua Engineering Pvt. Ltd. She and her husband exclusively held all shares in the company (the assessee's share holding was to the tune of 12%). The assessee sold 1100 shares bearing face value of Rs. 10/- per share to her husband on 31.07.1993. She likewise sold balance 860 shares to her husband on 30.4.1994. Her husband apparently sold the shares to a third party for Rs. 1400/-; that transaction was separately reported and assessed to capital gains in accordance with the provisions of the Income Tax Act. The Gift Tax Officer formed an opinion that the sale at Rs. 10/- by the assessee of the shares was for inadequate consideration and proceeded to impose gif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es is premised upon M/s Dua Engineering Pvt. Ltd. being an investment company is plainly erroneous and contrary to the express provisions of law. Learned counsel relied upon the definition of "Investment Company" in Rule 2(6) of Schedule III to the Wealth Tax Act which are made applicable by reference to the provisions of the Gift Tax Act. Since M/s Dua Engineering Pvt. Ltd. did not report any income mainly on the basis of rents, capital gain or income from other sources, it could not be deemed to be an investment company. In such an event, even if it was assumed that the shares sold were for inadequate consideration, the book value of the company (a non-investment company) had to be considered. The book value at that stage was Rs. 6.86 per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade by the transferor." 6. Section 6 prescribes how the value of the gifts are to be determined. It reads as follows:- "(1) Subject to the provisions of sub-section(2), the value of any property, other than cash, transferred by way of gift shall, for the purposes of this Act, be its value as on the date on which the gift was made and shall be determined in the manner laid down in Schedule II. (2) Where a person makes a gift which is not revocable for a specified period, the value of the property gifted shall be capitalized value of the income from such property during the period for which the gift is not revocable." 7. Rule 11 of the Second Schedule to the Gift Tax Act as applicable at that relevant time, refers to the rules embodied in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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