9911796707
|
Home
Issues Involved:
1. Whether there was a deemed gift within the meaning of section 4(1)(a) of the Gift-tax Act, 1958. 2. Whether the gift made would be exempt under section 5(1)(xiv) of the Gift-tax Act, 1958. Summary: Issue 1: Deemed Gift u/s 4(1)(a) of the Gift-tax Act, 1958 The assessee, a private limited company, transferred its business as a going concern to a partnership firm. The Gift-tax Officer (GTO) treated the difference between the book value and the market value of the assets, including goodwill and stock-in-trade, as a gift. The Tribunal, however, found that the consideration was adequate and thus, section 4(1)(a) was not applicable. The High Court upheld this view, stating that the adequacy of consideration should be judged based on the facts and circumstances of each case, and not solely on market value. The court emphasized that unless the consideration shocks the conscience, it cannot be deemed inadequate. The court also noted that the GTO had not evaluated the business as a going concern but had picked individual assets, which was not permissible. Issue 2: Exemption u/s 5(1)(xiv) of the Gift-tax Act, 1958 The Tribunal alternatively held that even if there was a gift, it would be exempt under section 5(1)(xiv) of the Act. However, since the High Court found no deemed gift under section 4(1)(a), it did not find it necessary to address the exemption issue. Conclusion: The High Court answered the first question in the affirmative, in favor of the assessee, stating that there was no deemed gift. Consequently, it did not address the second question regarding the exemption. The reference in T.C. No. 343 of 1978, which challenged the adequacy of consideration, was also answered in favor of the assessee. The court found that the materials in the balance-sheet could form the basis of the Tribunal's conclusion regarding the adequacy of consideration. The assessee was entitled to costs, with counsel's fee set at Rs. 500.
|
