1982 (5) TMI 90 - AT - Income Tax

Summary

Issues: Valuation of estate for gift-tax assessment, applicability of CBDT circular on valuation, exemption under section 5(1)(viii) for gift to wife.

Valuation of Estate for Gift-Tax Assessment:
The case involved appeals by four related assesses regarding the valuation of a rubber estate named 'Reveira Estate' for the assessment year 1978-79. The estate, previously owned by M/s Excel Movies, was transferred to a firm consisting of six partners. The Gift Tax Officer (GTO) estimated the value of the estate at Rs. 9,000 per acre, higher than the Rs. 6,500 per acre claimed by the assesses. The GTO's valuation was upheld by the Appellate Assistant Commissioner (AAC), leading to the appeals. The main argument presented was that the GTO's valuation was unjustified, considering factors such as varying agricultural income and the type of rights held by the assesses.

Applicability of CBDT Circular on Valuation:
During the hearing, the assesses' representative referred to Circular No. 326 issued by the Central Board of Direct Taxes (CBDT) regarding the valuation of agricultural lands for wealth tax purposes. The assesses contended that the estate fell under a specific category in the circular, suggesting a lower valuation than that determined by the GTO. The departmental representative argued that the circular's guidelines might not be directly applicable to gift-tax assessments. However, the tribunal emphasized that the market value of the asset should be determined for both gift-tax and wealth-tax assessments, and directed the GTO to recompute the estate's value based on the circular's guidelines. If the recalculated value was lower, the original value returned by the assesses would be adopted.

Exemption under Section 5(1)(viii) for Gift to Wife:
In one of the appeals, a point was raised regarding the exemption under section 5(1)(viii) for a gift made to a partner, who was also the wife of one of the original owners of the estate. The AAC rejected this claim, stating that there was no evidence to prove that the gift was specifically made to the wife. It was established that the assessee surrendered his interest in the property to all partners of the firm, not solely to his wife. Consequently, the tribunal upheld the AAC's decision, denying the exemption under section 5(1)(viii) for the gift to the wife.

In conclusion, three appeals were treated as allowed, while one appeal was partly allowed based on the valuation and exemption issues discussed and decided by the tribunal.