Gift-tax valuation rules apply to pending proceedings, requiring gifted property to be revalued under Schedule II methodology.

Section 6 of the Gift-tax Act, 1958, read with Schedule II, required gifted property to be valued in accordance with the prescribed statutory method, using the valuation methodology drawn from Schedule III to the Wealth-tax Act, 1957 with specified modifications. The valuation rules were treated as procedural and evidentiary in character, so they applied to pending proceedings. A valuation made without following Schedule II could not be sustained, and the property was to be revalued under the statutory schedule.

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Issues: Whether the valuation of gifted property had to be made strictly in accordance with Schedule II to the Gift-tax Act, 1958, and whether the prescribed valuation rules applied to a pending proceeding.

Analysis: Section 6 of the Gift-tax Act, 1958, read with Schedule II, prescribed the manner in which the value of property gifted was to be determined. Schedule II adopted the valuation methodology in Schedule III to the Wealth-tax Act, 1957, subject to specified modifications. The valuation rules were procedural in character and partook of the nature of a rule of evidence. Such procedural rules apply to pending proceedings, and the valuation already made without following the prescribed schedule could not be sustained.

Conclusion: The property had to be revalued strictly in terms of Schedule II to the Gift-tax Act, 1958, and the petitioner succeeded on this issue.

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