Valuation of unquoted shares under gift-tax law raises a referable question of law where judicial views conflict.

Valuation of unquoted shares for gift-tax purposes raised a referable question of law because conflicting High Court views existed on whether yield basis or break-up value basis, and on the relevance of the balance-sheet nearest the transfer date. The Court held that, in the absence of binding Supreme Court or jurisdictional authority settling the valuation principle, the Tribunal could not treat the Revenue's proposed questions as redundant or unnecessary. The disputed valuation method itself was therefore a proper subject for reference, and the Revenue's application was allowed with directions to state the case and refer the questions of law.

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Issues: Whether the Tribunal was justified in refusing to refer the questions proposed by the Revenue on the valuation of unquoted shares and the validity of the notice issued for deemed gift assessment.

Analysis: The value of unquoted shares for gift-tax purposes was in dispute, particularly the choice between yield basis and break-up value basis and the relevance of the balance-sheet proximate to the date of transfer. The Court noted that there was divergence among High Courts on the correct valuation principle and that no binding decision of the Court or the Supreme Court had settled the issue. It held that the correct principle of valuation applicable to the case was itself a question of law and that the Tribunal was not justified in treating the proposed questions as redundant or unnecessary for reference.

Conclusion: The questions proposed by the Revenue did arise out of the Tribunal's order and had to be referred for the Court's opinion.

Final Conclusion: The application was allowed and the Tribunal was directed to state the case and refer the questions of law.

Ratio Decidendi: Where the applicable principle for valuing unquoted shares under the gift-tax law is disputed and conflicting judicial views exist, the issue gives rise to a referable question of law.

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