TMI Blog1982 (7) TMI 79X X X X Extracts X X X X X X X X Extracts X X X X ..... getable Products Ltd., of the face value of Rs. 100 each at Rs. 125 per share to the sons and daughters of one Nagardas Ranchhoddas Sanghavi, a partner of the said deceased in the firm of M/s. R. Ratilal Company, but who was not related to the said deceased. On the same date, the said Nagardas sold an identical number of ordinary shares of the said company at the price of Rs. 125 per share to the wife, daughters and daughter-in-law of the said deceased. In the income-tax proceedings, the ITO invoked the provisions contained in the proviso to s. 12B(2) of the Indian I.T. Act, 1922, for the assessment year 1960-61, on the ground that the sales were effected by the deceased with the object of avoidance or reduction of his liability to tax on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ked out on the basis of the difference between the fair market value of the said shares and the price at which the assessee had sold them, was next sought to be taxed as a gift under the G.T. Act, but it was held that no liability to gift-tax arose on the facts and circumstances of the case. On the same facts, the Asst. Controller held that there was a gift of property by the said deceased to the transferee, namely, the sons and daughters of Nagardas, represented by the difference between the fair market value of the said shares and the actual consideration received by the deceased and as the said gift was made within a year prior to his death, the provisions of s. 9 of the said Act, became applicable and the property should be deemed to pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s they stood at the material time. Sub-s. 1 of s. 9 of the said Act reads as follows: " 9. (1) Property taken under a disposition made by the deceased purporting to operate as an immediate gift inter vivos whether by way of transfer, delivery, declaration of trust, settlement upon persons in succession, or otherwise, which shall not have been bona fide made one year or more before the death of the deceased shall be deemed to pass on the death: Provided that in the case of gifts made for public charitable purposes, the period shall be six months." The relevant portion of sub-s. (1) of s. 27 reads thus: " 27. (1) Any disposition made by the deceased in favour of a relative of his shall be treated for the purposes of this Act as a gi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e shares and the price at which they were sold should be treated as a disposition under sub-s. (1) of s. 27 of the said Act and was liable to tax as the property deemed to pass on the death of the deceased under the provisions of the said sub-section read with sub-s. (1) of s. 9 of the said Act. In support of this contention, reliance was sought to be placed by Mr. Naik on the decision of the Supreme Court in CIT v. C. M. Kothari [1963] 49 ITR 107 (SC). In our view, Mr. Naik can seek no support from this decision, because that decision is based on the construction of s. 16(3)(a)(iii) of the Indian I.T. Act, 1922, which, in terms, covered the case of an indirect transfer or cross-transfer whereas there is nothing in the provisions of s. 27(1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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