Best obtainable price for rights in debentures was not proved, so the price difference was treated as deemed gift.

Rights in partially convertible debentures sold below prevailing market value were held not to be shown as sold at the best obtainable price. The assessee relied mainly on a stockbroker's letter suggesting difficulty in disposing of a large lot within a short sale period, but there was no further evidence of compulsion, diligence, or inability to realise the market rate. On that material, the statutory valuation method applied and the difference was treated as a deemed gift under the Gift Tax Act, 1958. The assessee therefore failed to discharge the burden of proving that the sale price reflected the best possible price.

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Issues: Whether the assessee had discharged the burden of proving that the rights in partially convertible debentures were sold at the best possible price, so as to escape treatment of the difference as a deemed gift under the Gift Tax Act, 1958.

Analysis: The assessee sold the rights at Rs. 5 per right though the prevailing market value was substantially higher. The only material relied on was a letter from the stockbroker expressing difficulty in selling a large lot within the limited sale period. That apprehension, by itself, was not treated as proof that the assessee had made sufficient efforts to obtain the best price or that the market price could not have been secured. The Court found that there was no other supporting material to establish compulsion, diligence, or inability to sell at the prevailing market rate. The Tribunal's acceptance of the broker's letter as sufficient evidence was held to be adequate basis and the valuation had to proceed in accordance with the statutory method.

Conclusion: The assessee failed to establish that the sale price represented the best price obtainable, and the assessment treating the difference as deemed gift was restored.

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