Punjab & Haryana H.C : Valuation of shares at Rs. 3,000 per share was inadequate

High Court Of Punjab & Haryana

Karan Kumar (Minor) vs. Commissioner Of Gift Tax

Section GT 26(3)

Ashok Bhan & N.K. Agrawal, JJ.

GT Case No. 1 of 1992

2nd July, 1997

Counsel Appeared

A.K. Mittal, for the Appellant : Sanjay Bansal, for the Respondent

JUDGMENT

ASHOK BHAN, J. :

An assessee, a minor, has filed this petition under s. 26(3) of the GT Act, 1958, for issuance of a mandamus directing the Tribunal, Amritsar Bench, Amritsar, to refer the following six questions of law to this Court, along with the statement of the case, for its opinion :

“1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that valuation of shares at Rs. 3,000 per share was inadequate ? Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in allowing deduction of tax liability at Rs. 10,70,308, i.e., equivalent to the advance tax paid by the company and not Rs. 16,19,000 being provision for tax liability as appearing in the balance-sheet of the company ?

Whether, on the facts and in the circumstances the case, the Tribunal was right in law in treating gift by minor as valid ?

Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in confirming the valuation of gifted shares on the basis of the balance-sheet as on 31st March, 1984, instead of the balance-sheet as on 31st March, 1983 ?

Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in not allowing any deduction or discount from the value of gifted shares as determined by the GTO on account of : (a) restrictions on transfer of shares; (b) non-marketability of shares. 6. Whether, on the facts and in the circumstances of the case, the gifted shares should have been valued as per yield basis instead of r. 1D ?” Kakkar Complex Steels, a private limited company, is controlled by three brothers, namely, Sarvshri DipanKumar, Vipan Kumar and Ravinder Kumar. Karan Kumar (minor) son of Shri Vipan Kumar, the assessee, held 125 equity shares of the face value of Rs. 1,000 per share in the company. The assessee transferred/sold his entire holding of 125 shares to his real uncle, Dipan Kumar, on 1st June, 1984, at the rate of Rs. 3,000 per share. Dipan Kumar was the main shareholder and was controlling the affairs of the company. Against the assessee’s working of the value of the gift on the basis of the sale price mentioned above, the GTO computed the value of the gift by applying the break-up valuation method on the total assets of the company which, according to him, gave the value per share at the rate of Rs. 5,898. He, accordingly, held that the total value of the shares transferred should have been Rs. 7,37,250 as against the consideration of Rs. 3,75,000 declared and, therefore, the difference between the two amounting to Rs. 3,62,250 was taken as deemed gift and assessed. An appeal carried by the assessee was dismissed by the GT Commissioner. Further appeal to the Tribunal met with the same fate. The questions of law claimed by the assessee were declined on the ground that no referable question of law arose from the order of the Tribunal.

After hearing counsel for the parties, we are of the opinion that questions Nos. 1, 2, 4, 5 and 6 reproduced above, do arise from the order of the Tribunal, which require consideration by this Court. However, question No. 3 does not arise from the order of the Tribunal as the same was not taken as a ground before the Tribunal. There is no discussion on this point in the order of the Tribunal and, therefore, it cannot be said that this question arises from the order of the Tribunal. The same is, there fore, declined.

We direct the Tribunal, Amritsar Bench, Amritsar, to refer questions Nos. 1, 2 and 4 to 6, reproduced above, along with the statement of the case to this Court for its opinion. No costs.

[Citation : 232 ITR 605]

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