9911796707
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Issues:
1. Valuation of shares for gift tax assessment. 2. Deduction for restriction on transfer of shares. 3. Adequacy of consideration received for transfer of shares. Analysis: Issue 1: Valuation of shares for gift tax assessment The appeal and cross-objection arose from the Commissioner (Appeals) partially sustaining the assessment of deemed gift. The assessee transferred 500 shares to an HUF for Rs. 50,000. The GTO assessed the gift based on a valuation of Rs. 3,23,042, while the Commissioner (Appeals) valued the shares at Rs. 226.96 using the break-up method. The Revenue contended that Wealth-tax Rules valuation was irrelevant, but the Tribunal preferred the break-up method over capitalizing yield. Issue 2: Deduction for restriction on transfer of shares The Commissioner (Appeals) allowed a 15% deduction for the restriction on share transfer, citing a precedent for private limited companies. The Tribunal upheld this deduction, considering it reasonable given the nature of the restriction. The Tribunal emphasized that even if Wealth-tax Rules were not directly applicable, a deduction was warranted due to share transfer restrictions. Issue 3: Adequacy of consideration received for transfer of shares The assessee argued that the consideration was adequate as he retained a one-third interest in the shares post-transfer. The Tribunal agreed, noting that the future fluctuation in coparcenary shares was irrelevant for assessing adequacy of consideration. Citing legal precedents, the Tribunal allowed a further one-third discount, determining the adequate consideration to be Rs. 75,654. Since the assessee received only Rs. 50,000, the balance of Rs. 25,654 was deemed a taxable gift under section 4(1)(a). In conclusion, the Tribunal dismissed the revenue's appeal and partly allowed the assessee's cross-objection, directing the GTO to amend the gift-tax assessment accordingly.
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