9911796707
TMI Blog1982 (2) TMI 86X X X X Extracts X X X X X X X X Extracts X X X X ..... od was calendar year ended on 31st Dec., 1972 and not the financial year as shown in the assessment order. We are concerned here with a reassessment framed by reopening the original assessment under s. 147(7) of the I Act on the basis of A.G.'s Audit Party note. The note dt. 9th Dec., 1977, a copy a which was filed by the Deptl. Rep. on our requisition, deals with the valuation of 89 ordinary shares of Karamchand Premchand Pvt. Ltd. received by the assessee trust as a donation from Smt. Mridula A. Sarabhai. Under s. 12 of the IT Act, any voluntary contributions received by a trust created wholly for charitable or religious purposes (not being contributions made with a specific direction that they shall from part of the corpus of the trust) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... group. The whole issue has not been projected in a proper perspective in the assessment order and the basic issue which was involved has been lost sight of, namely, the valuation of voluntary contribution received in the form of shares by the assessee trust for the purposes of s. 12 of the IT Act. This is the key facts which required consideration but without touching the same Audit also supposed that under s. 12 a donation in kind is to be valued no market value basis and not on the basis the donor has followed for the purpose of making the gift. We will presently show that this is the crux of the problem in hand. 3. The Revenue is aggrieved with the order of the CIT(A) holding that the ITO's action in reopening the assessment was witho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f a voluntary contribution received in kind, namely, 89 shares of Karamchand Premchand Pvt. Ltd. The undisputed facts are that the donor valued these shares for the purposes of gift on break up value method as per Wealth-tax Rules as on the date of gift, i.e., 14th March, 1972. This value on break up value method was based on the balance sheet of the limited Company as on 31st March, 1971 and it amounted to Rs. 2,253 per share. Shri K.C. Patel also pointed out that a gift-tax assessment had been framed on the donor adopting the same value for the gift at the rate of Rs. 2,253 per share. The question posed thus by audit note was of the interpretation of s. 12 of the IT Act, namely, whether a donation received in kind by a trust is to be valu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plification. The inaccuracy in the note of the Audit is about the fact that it did not consider the question of valuing the shares on the date of gift, i.e., 14th March, 1972, but instead went after the value as on 31st March, 1972 for wealth-tax assessment purposes of the donor. This approach was totally uncalled for. The Audit could not consider the question of valuation on any date other than 14th March, 1972. Shri Patel had stated that there is no dispute that on the basis of balance sheet of the Limited Company available as near to the date of gift which was as on 31st March, 1971, the value per share on break up method would be only Rs. 2,253 per share. This factual position was not controverted by the Revenue. This shows that the A.G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1st March, 1972, the ITO has proceeded to value the same shares on Limited Company's balance-sheet as on 30th June, 1972, Shri Patel submitted that the correct position in law was to value the shares gifted on the basis of balance sheet available on the date of the gift and for that the balance sheet available of the Limited Company was only as on 31st March, 1971. He relied upon a Gujarati High Court decision in CGT, Gujarat vs. Executors and Trustees of the Estate of Late Shri Ambalal Sarabhai 1975 CTR (Guj) 1 : (1975) 100 ITR 447 (Guj). We find force in this line of reasoning as well put forward by the assessee's counsel, which goes to establish that in fact there was no under-statement in the value of gifted property. Shares of Private ..... X X X X Extracts X X X X X X X X Extracts X X X X
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