1967 (9) TMI 23 - HC - Income Tax

Gift Tax Act, 1958 - Tribunal referring question of valuation of property to valuers. Altering valuation fixed by valuers - Tribunal had no jurisdiction to alter valuation and any question of law arose out of its order

Summary

Issues:
1. Competency of the reference made by the Tribunal under section 26(1) of the Gift-tax Act.
2. Interpretation of the phrase "arising out of such order" in section 26(1) of the Gift-tax Act.
3. Application of legal principles from Commissioner of Income-tax v. Scindia Steam Navigation Co. Ltd. and Keshav Mills Co. Ltd. v. Commissioner of Income-tax to the present case.

Analysis:
The High Court of Kerala was presented with a reference made by the Income-tax Appellate Tribunal regarding the valuation of a property under the Gift-tax Act, 1958. The Tribunal had determined the value of a property at Rs. 58,375, which was contested by the assessee. The Tribunal, after considering various arguments, deducted the value of certain land from the total, resulting in a revised valuation of Rs. 38,875. The Commissioner of Gift-tax sought a reference to the High Court on the question of whether the Tribunal was correct in altering the valuation fixed by the valuers. The assessee raised a preliminary objection, arguing that the reference was incompetent as the question did not arise out of the Tribunal's order.

The High Court examined the legal principles established by the Supreme Court in Commissioner of Income-tax v. Scindia Steam Navigation Co. Ltd. and Keshav Mills Co. Ltd. v. Commissioner of Income-tax regarding the phrase "arising out of such order." It was emphasized that a question must be raised before or decided by the Tribunal to be considered as arising out of its order. In this case, the question referred had not been raised before or considered by the Tribunal, leading the High Court to conclude that the reference was incompetent.

The High Court held that the interpretation given by Chagla C.J. in Madanlal Dharnidharka v. Commissioner of Income-tax, which provided a broader view of the phrase "arising out of such order," was no longer valid in light of the Supreme Court's rulings. Consequently, the High Court declined to answer the question referred by the Tribunal due to its incompetency. No costs were awarded in this matter.