Deemed gift on transfer of stock exchange membership below market value under Gift-tax law, with appeal not admitted

Transfer of a stock exchange membership right for consideration below its market value was treated as a transfer of property with money value, so the excess of market value over consideration was deemed a gift under section 4(1)(a) of the Gift-tax Act, 1958. The court held that section 2(xxii) covered such an interest in property and distinguished authorities on attachability and the general nature of membership rights because an actual transfer for inadequate consideration had occurred. As the market value adopted by the Tribunal was not disputed, no ground was shown for admission of the appeal.

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Issues: Whether transfer of membership of a stock exchange for consideration below market value constituted a deemed gift chargeable to gift-tax under the Gift-tax Act, and whether the appeal was fit for admission.

Analysis: The membership right was transferred for consideration, and the court treated that right as a valuable interest having money value. Under section 2(xxii) of the Gift-tax Act, 1958, property includes an interest in property, and under section 4(1)(a) of the Gift-tax Act, 1958, the excess of market value over consideration is deemed to be a gift. The court distinguished the authorities dealing with attachability and the nature of stock exchange membership, holding that those observations did not govern a case where an actual transfer of the membership right had taken place for inadequate consideration. The market value adopted by the Tribunal was not disputed.

Conclusion: Transfer of the stock exchange membership for less than its market value attracted deemed gift-tax, and no ground was made out for admission of the appeal.

Ratio Decidendi: Where a transferable valuable right or interest in property is actually transferred for consideration below its market value, the difference is chargeable as a deemed gift under section 4(1)(a) of the Gift-tax Act, 1958.

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