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TMI Blog1997 (11) TMI 39X X X X Extracts X X X X X X X X Extracts X X X X ..... year 1974-75 adopted the value of the shares adopting the principles of valuation stipulated under rule 1D of the Wealth-tax Rules, 1957. The Gift-tax Officer, adopted the provisions of 1D of the Wealth-tax Rules on the basis of the circular issued by the Central Board of Direct Taxes dated March 26, 1968. Subsequently, the Gift-tax Officer came to know about the Board's circular dated October 29, 1974, issued on the same subject of valuation of shares for gift-tax purposes and the said circular of the Board directed the Assessing Officer to adopt the provisions of rule 10(2) of the Gift-tax Rules for valuation of the shares for the purpose of gift-tax. The relevant portion of the Board's circular dated October 29, 1974, reads as under : "As the language of rule 10(2) of the Gift-tax Rules is identical to that of section 37 of the Estate Duty Act, the valuation of shares under rule 10(2) of the Gift-tax Rules, 1958, will be governed by the Board's letters dated May 3, 1965, issued from F. No. 25A/3/65-ED which prescribe the method of valuation of shares under section 37 of the Estate Duty Act, 1953." Consequently, the Gift-tax Officer felt that the valuation of the shares has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the real market value and it was in excess of the respective value shown in the balance-sheet. Accordingly, the Appellate Tribunal came to the conclusion that the Gift-tax Officer has no information before him to enable him to form an opinion that the value of the lands and buildings shown in the balance-sheet was less than the value adopted in the reassessment proceedings. Therefore, the Appellate Tribunal held that the assessments were reopened on the basis of some suspicion and mere suspicion would not give him the power to reopen the assessment already made. The Tribunal also noticed another contention raised on behalf of the assessee that if the provision for gratuity is taken into account, there would not have been any underassessment. The Tribunal also noticed that it is not permissible for the Gift-tax Officer to pick and choose certain assets and then determine the market value of the shares. The Tribunal held that the Gift-tax Officer must have taken into account the sundry debts and other liabilities also before coming to the conclusion that there was underassessment and in this view of the matter, the Appellate Tribunal held that there was no information before the Gift ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able gift had escaped assessment by way of underassessment. Mr. Janarthana Raja, learned counsel for the assessee, on the other hand, submitted that the Tribunal has given a categorical conclusion that there was no information before the Gift-tax Officer that the market value of the assets of the company was higher than the value shown in the balance-sheet and in view of the finding of the Appellate Tribunal that there was no information before the Gift-tax Officer that the taxable gift had escaped assessment, the Appellate Tribunal has come to a correct conclusion in holding that the provisions of section 16(1)(b) of the Act were not attracted on the facts of the case. We have carefully considered the rival, submissions of counsel for the respective parties. We have seen that the Appellate Tribunal has recorded a clear finding that the Revenue has not placed any material before the Appellate Tribunal to show that there was any information coining into the possession of the Gift-tax Officer subsequent to the completion of the original assessment that the market value of the land and building of the companies was much higher than the value shown in the balance-sheet of the compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he effect that it is not possible for him to ascertain the value of the shares by reference to the value of the total assets of the company and in the absence of any such finding, it is not open to the Gift-tax Officer to value the shares on the basis of the market value of the assets of the company. The Appellate Tribunal also recorded a finding that there was no information before the Gift-tax Officer to form an opinion that the value of the land and building as shown in the balance-sheet was lower than the market value of the assets. There are no evidence or materials to the effect that the market value of the assets of the company was higher than the value of the same as shown in the balance-sheet and in the absence of any evidence, it is not possible for the Gift-tax Officer to come to the conclusion that it was not possible for him to ascertain the value of the shares by reference to the value of the total assets of the company. Therefore, when the pre-requisite condition for the applicability of the rule 10(2) is missing, we have to hold that, even assuming that it is open to the Gift-tax Officer to apply rule 10(2) of the Gift-tax Rules, it is not open to him to value the s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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