1981 (12) TMI 18

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....-sheet of the two companies as at March 31, 1972, and applied the break-up value method on the net worth of the companies as on that date. On appeal, the Tribunal held that since the gift took place before the balance-sheet as at March 31, 1972, the break-up value method must be applied to the last balance-sheet before the date of the gift, namely, the balance-sheet as at March 31, 1971. The correctness of the method which found favour with the Tribunal is the subject-matter of the present reference. The question of law which has been referred to us in this case is at the instance of the Department and it is as follows : " Whether, on the facts and in the circumstances of the case, it has been rightly held that the shares of M/s. T. V....

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....ount of 15 per cent. on the break-up value of the shares so as to approximate the figure to the probable market value. There is no similar provision under the G.T. Act or the Rules made thereunder for ascertaining the market value of unquoted shares where such unquoted shares are taxable gifts. The question in the present case is not, however, whether the value of the gifted shares has to be arrived at by applying the break-up value method to the assets and liabilities of the company in which the shares are held. The pertinent point of controversy between the assessee and the Department in the present case is much narrower. It is whether the break-up value method has to be applied to the balancesheet immediately before the date of the gift ....

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....andard of valuation, is far removed from the date of the gift, as compared to the balance-sheet as on March 31, 1972. It follows, therefore, that this later balance-sheet, although subsequent to the date of the gift cannot be disregarded. In a case where subsequent to the date of the gift, something happens to the assets of the company or the liabilities of the company which will tilt the value of the shares one way or the other, that factor alone can be taken into account. As for the rest, the balancesheet as on March 31, 1972, would be, the proper measure for the valuation of the shares. This is because, in between the two balance-sheets, one as at March 31, 1971, and the other as at March 31, 1972, there might have been several developme....