1984 (2) TMI 116 - AT - Income Tax

Summary

Issues:
1. Dispute over deemed gift vs. bona fide sale of shares at a lower price.
2. Calculation of break-up value of shares based on balance-sheet date for valuation.
3. Appeal by Revenue against acceptance of break-up value from an earlier balance-sheet.
4. Cross-objection by assessee challenging the deemed gift assessment.

Analysis:
1. The case involves a disagreement between the Revenue and the assessee regarding the nature of a transaction involving the sale of shares at a lower price than the perceived market value. The Revenue contended that the shortfall in consideration amounted to a deemed gift under the GT Act, while the assessee argued it was a bona fide sale with no gift element. The CGT Jalandhar found in favor of the assessee, modifying the gift assessment based on the break-up value calculation.

2. The dispute also centered around the calculation of the break-up value of the shares, with the Revenue contesting the use of an earlier balance-sheet date for valuation. The CGT relied on Explanation (1) to WT Rule 1-D, which allowed considering the balance-sheet from the immediate preceding date when the valuation date's balance-sheet was unavailable. The CGT's decision was supported by legal precedents from the Madras and Kerala High Courts, emphasizing the relevance of the balance-sheet available closest to the transaction date.

3. The Revenue appealed against the acceptance of the break-up value based on the earlier balance-sheet, arguing for valuation using the balance-sheet from the year of the transaction. However, the Tribunal upheld the CGT's decision, citing the legal interpretation favoring the use of the closest available balance-sheet for valuation purposes.

4. In response to the Revenue's appeal, the assessee filed a cross-objection challenging the deemed gift assessment. However, the Tribunal dismissed the cross-objection due to its late filing, noting the failure to provide a satisfactory explanation for the delay. Consequently, both the Revenue's appeal and the assessee's cross-objection were dismissed by the Tribunal.