1982 (4) TMI 148

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....e gift. The assessee filed a return showing the taxable gift as nil along with a covering letter in which it was stated that no gift was involved in the issue of new shares by the company and that there was no taxable gift. The GTO, however, observed that the assessee during the previous year had issued 900 shares at par value, that the value of the assets shown in the balance sheet was Rs. 2,79,762, that the total value of the assets held by the assessee-company worked out to Rs. 15,58,362, that deducting from this the liabilities shown in the balance sheet of Rs. 12,87,434, the net worth of the company worked out to Rs. 2,70,928, that when the worth of the company was divided by 1,000, i.e., the number of shares, the value of each share c....

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....nd the consideration received of Rs. 90,000. He deducted the statutory exemption of Rs. 5,000 and determined the taxable gift at Rs. 1,48,900. On appeal before the Commissioner (Appeals), it was contended on behalf of the assessee that there was no transfer ; that the allotment of shares by a company cannot be considered to be a transfer ; and that, therefore, there was no liability to gift-tax. The Commissioner (Appeals) observed that in this case, cash was received by the company and the shares in the company were transferred by it to the person, who gave cash to it in lieu of the shares offered to him. The Commissioner (Appeals) by a peculiar reasoning, found in paragraph two of his order, rejected the assessee's contention and held that....

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.... Rs. 100 each. The authorities below have proceeded on the footing that when the company issued shares at par value, it should be presumed that there was a deemed gift in respect of the amount represented by the difference between the market value and the value for which the shares were allotted. The GTO and the Commissioner (Appeals) have proceeded to work out the market value for the purpose of arriving at the deemed gift. Having heard the parties, we are of the opinion that it is not necessary for us to go into the question of finding out the market value of the shares because we are of the considered opinion that there was no transfer at all involved in this case. It is an axiomatic proposition of law that a company is a juristic person....