1983 (10) TMI 148

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... gift as nil with the covering letter dated 15-12-1981. In that letter, he stated that as the transfer has been made for consideration, there was no gift. He also claimed that it did not come within the scope of section 4(1)(a) of the Gift-tax Act, 1958 ('the Act') also because the market value of the shares will not be more than Rs. 50,000 as it related to a private limited company where the transfer of shares was restricted and the assessee had one-third interest on the coparcenary in the transferee-HUF to and, hence, there was no element of gift. The GTO noted that in the income-tax records of the assessee these shares have been valued at Rs. 1,28,200 as on 31-3-1980 in the statement of affairs filed along with the return for the assessm....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....are even after the transfer and a further deduction should be given in ascertaining the consideration required for the transfer. 3. On consideration of the rival submissions, we are of the opinion that the assessee is entitled to some further relief. As far as the valuation of the shares is concerned, the revenue relies on rule 10(2) of the Gift-tax Rules, 1958, which provides that where the articles of association of a private limited company contain restrictive provision as to the alienation of shares, the value of the shares if not ascertainable by reference to the value of the total assets of the company shall be estimated. This itself indicates that wherever possible, the break up method should be preferred to the method of estimati....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....rred was only two-thirds of the interest in the share because the assessee had one-third share in the HUF but that since the assessee would still have one-third share in the shares even after the transfer, the consideration of Rs. 50,000 received was considered to be adequate as between the parties. The objection of the revenue was that the share of the deceased in the coparcenary was variable with the increase or decrease in the number of coparceners and, therefore, it was not possible to accept the claim of the assessee. But we do not find any force in this argument because we have to take the position as on the date of transfer and any change in the future in the share of the assessee in the coparcenary would be irrelevant in ascertainin....