Just a moment...

Top
FeedbackReport
×

By creating an account you can:

Logo TaxTMI
>
Feedback/Report an Error
Email :
Please provide your email address so we can follow up on your feedback.
Category :
Description :
Min 15 characters0/2000
TMI Blog
Home / RSS

1997 (12) TMI 104

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....te relates to valuation of unquoted shares of a company which were transferred on March 28, 1973. Section 6 of the Gift-tax Act lays down the method of valuation of gifts. Sub-section (3) provides that where the value of the property cannot be estimated because it is not saleable in the open market, the value shall be determined in the prescribed manner. There is no dispute that the shares are unquoted and are not saleable in the market. There was a restriction on the sale of shares in the market by the articles of association of the company. Both the department and the assessee agree that the valuation should be made by following the break-up method. The dispute, however, is as to the balance-sheet on the basis of which the break-up value ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ed in accordance with the balance-sheet figures as on March 31, 1972. But if the gift was made three days later on March 31, 1973, the valuation made on the basis of the balance-sheet as on March 31, 1973, may be much higher even though there is no change in the value of the assets of the company between March 28, 1973, and March 31, 1973, There is no justification for coming to this conclusion. The break-up value method is adopted to find out the correct value of the shares on the date of the gift. The figures of the balance-sheet of the year ended on March 31, 1973, will give a more realistic picture of the value of the assets of the company than the figures as on March 31, 1972. Our attention was drawn to a decision of the Madras High C....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ible that during that period the fortunes of the company languished and the value of its assets had decreased. In either event, when a valuation of shares is to be made as on March 28, 1973, it will be unrealistic to ignore the balance-sheet for the year ended on March 31, 1973. The assessee, of course, is entitled to point out that between March 28, 1973, and March 31, 1973, the value of the assets of the company has increased. If so, such variation in the value of the assets will have to be ignored. But the basis of the valuation will have to be the balance-sheet as on March 31, 1975. We were also referred to another judgment of the Madras High Court in the case of CWT v. S. Ram [1984] 147 ITR 278, where it was held : " In cases where g....