High Court Of Rajasthan : Jaipur Bench
Ravindra Kumar Jain vs. CIT & Ors.
Sections GT 2(xii), GT 4(1)(a)
Y.R. Meena & Shashi Kant Sharma, JJ.
IT Appeal No. 5 of 2003
23rd April, 2003
Counsel Appeared
S.K. Jain, Subhash Jain, P.K. Kasliwal & Ms. Santosh Sharma, for the Appellant
JUDGMENT
BY THE COURT :
By this application, the learned counsel for the applicant submits that by mistake he referred the provision of s. 260A of the IT Act, 1961, but the relevant provision is s. 27A of the WT Act, under which the appeal, in case of gift-tax, is maintainable. Considering his submissions, the amendment application is allowed. Amended cause title has already been filed. That be taken on record. Heard learned counsel for the appellant for admission of appeal also. This appeal is moved under s. 27A of the WT Act. Following questions are raised for our consideration : “Whether, on the facts and in the circumstances of the case, the transfer/nomination of membership of the Jaipur Stock Exchange Ltd., from the appellant to Shri Pawan Kumar Jain is amounts to Gift and is liable for tax under the provisions of s. 4(1)(a) of the GT Act, 1958 ?” “Whether, on the facts and circumstances of the case, the Tribunal was justified in assessing the value of said transfer of membership of the JSEL on 21st July, 1989, at Rs. 4,50,000 lacs, treating the said transfer only on 11th Nov., 1991, and on the basis of auction value in other cases for the purpose of charging of gift-tax under s. 4(1)(a) of GT Act, 1958 ?” “Whether, on the facts and in the circumstances of the case, the Tribunal is corrected in law in sustaining an addition of Rs. 4,50,000 lacs by adopting the value of the said transfer of membership of the stock exchange on 21st July, 1989, from the appellant to Shri Pawan Kumar Jain irrespective of the fact that such consideration was deleted by the appellate authority by the income-tax proceeding and held not liable to capital gain tax ?” “Whether on the facts and in the circumstances of the case, membership of stock exchange can be treated as personal property of a member and transfer of such membership would fall under the provision of GT Act, 1958 and is liable to tax and as deemed gift ?” “Whether, the Tribunal has rightly interpreted the bye-laws of Jaipur Stock Exchange Ltd., in holding the transfer of membership of stock exchange is liable to gift-tax in sustained the addition of Rs. 4,50,000 made by the AO ?” “Whether, on the facts and in the circumstance of the case, the issuance of notice under s. 16(1) of GT Act of 1959 and initiation of proceedings against the appellant is valid in law ?” The basic issue involved in these questions is whether there is case of deemed gift ? The admitted facts are that Jaipur Stock Exchange was incorproated as a company Ltd. by guarantee on 28th Dec., 1983. The appellant was admitted as a member of JSEL on 11th March, 1986 on payment of admission fee of Rs. 2,500. On 21st Aug., 1989, appellant entered into an agreement with Pawan Kumar that he will transfer the membership to him when it is transferable, as minimum 5 years are required, within which he cannot transfer the membership. The membership was finally transferred on 24th Dec., 1991, at Rs. 50,000. The GTO during the course of assessment noticed that one of the membership of the Stock Exchange was auctioned in 1991 at Rs. 8,71,000, therefore, he has taken the market value of the membership at Rs. 8,71,000 as on 11th Nov., 1991 and taxed the difference of the amount at which it was transferred and the market value, as deemed gift under s. 4(1) of the GT Act, 1958.
In appeal before the Tribunal, Tribunal has reduced the market value of membership to Rs. 4,50,000 and modified the order of GTO to that extent. Learned counsel for the appellant Mr. Jain submits that membership is not a property, therefore, there is no question of charging any gift-tax on transfer of the membership of the stock exchange by the appellant. He placed reliance on the decision of their Lordships in the case of Stock Exchange, Ahmedabad vs. Asstt. CIT (2001) 166 CTR (SC) 285 : (2001) 248 ITR 209 (SC). The property has been defined in cl. (xxii) of s. 2 of the GT Act, 1958. As per the definition, the “property” includes any interest in the property, movable or immovable. Clause (a) of sub-s. (1) of s. 4 provides for deemed gift. As per cl. (a) of sub-s. (1) of s. 4, the amount by which the market value of the property at the rate of the transfer exceeds the value of the consideration shall be deemed to be a gift by the transferor. It is true that there Lordships have considered whether membership of the stock exchange can be attached as in case of other properties and whether it is a property. Their Lordships have taken the view that right of nomination finally vests in the stock exchange and without nomination by the stock exchange, membership cannot be transferred, therefore, that membership cannot be attached like any other property. But in the case in hand, there is no dispute that there was a transfer of membership. There is transfer of the membership by the appellant and his membership has been transferred at the consideration of Rs. 50,000. When a valuable right or any interest in the property, which has some value in terms of money, if that right has been transferred for the consideration less than its market value, that attracts the provisions of cl. (a) of sub-s. (1) of s. 4 of the GT Act. So far as the market value is concerned, learned counsel for the appellant has not disputed the market value of the membership, which has been finally taken by the Tribunal. Considering the law involved in this case and on the facts, the view taken by their Lordships in this case has no application. Considering these admitted facts, no case is made out for admission of the appeal. The appeal stands dismissed at admission stage.
[Citation : 263 ITR 368]
