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Issues:
1. Valuation of shares for gift-tax purposes based on break-up value method versus market value. 2. Interpretation of rule 10(2) of the Gift-tax Rules regarding valuation of shares in private companies. 3. Application of the yield method versus break-up method for valuation of shares in a going concern. Detailed Analysis: 1. The judgment addressed the issue of valuation of shares for gift-tax purposes using the break-up value method versus market value. The assessee had gifted shares to family members, valuing them based on Wealth-tax Rules. The GTO, however, argued that the value should be determined based on the market value of the assets of the company. The GTO made adjustments to the assets' value, resulting in a higher valuation of the shares. The Commissioner (Appeals) directed a revaluation based on Supreme Court precedents favoring the yield method for shares in a going concern. The Tribunal upheld the Commissioner's decision, emphasizing the need for market value determination for shares, dismissing the revenue's appeal. 2. The interpretation of rule 10(2) of the Gift-tax Rules regarding the valuation of shares in private companies was a crucial aspect of the judgment. The rule specifies that if the value of shares is not ascertainable based on total assets, it should be estimated based on open market sale. The revenue argued that the shares' value could be determined from the company's total assets, while the assessee contended that restrictions on share transfers made this method unfeasible. Citing judicial precedents, the Tribunal concluded that the market value of shares should be determined when total assets valuation is impractical, supporting the Commissioner's decision to revalue the shares based on market principles. 3. The application of the yield method versus the break-up method for valuing shares in a going concern was extensively discussed in the judgment. The assessee relied on Supreme Court decisions favoring the yield method for such valuations. The Commissioner (Appeals) also endorsed this approach, stating that the break-up method should only apply in exceptional circumstances. The Tribunal agreed with this interpretation, emphasizing the need for a market value determination for shares in a going concern. The decision highlighted the importance of commercial realism in valuation methods and dismissed the revenue's appeal, affirming the revaluation based on market principles for all three appeals. Overall, the judgment underscored the significance of market value determination over break-up value in valuing shares for gift-tax purposes, especially in cases involving private companies with restrictions on share transfers and shares in a going concern. The Tribunal's decision aligned with established legal principles and precedents, emphasizing the need for a commercially realistic valuation approach in such matters.
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