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TMI Blog1984 (10) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee sold 10 shares to his wife, Smt. Padmini Devi, on August 6, 1965. The shares were valued at the rate of Rs. 3,250 per share. The Wealth-tax Officer found that these shares were valued at the rate of Rs. 8,739 in the assessment order for the assessment year 1965-66. He, therefore, came to the conclusion that the shares were not transferred for adequate consideration. He, therefore, valued the share at Rs. 8,666.58 per share and accordingly included the value of the shares in the net wealth of the assessee under section 4(1)(a)(i) of the Act. The order of the Wealth-tax Officer has been annexed and marked as annexure " A " forming part of the statement of the case. The assessee came in appeal before the Appellate Assistant Commissioner and contended that the current value as determined by the assessee of 10 shares sold to the wife of the appellant would come to Rs. 66,630 at the rate of Rs. 6,663 per share. The total price received by the appellant from his wife amounted to Rs. 32,500. He, therefore, submitted that if the value of such shares is to be included in the net wealth of the appellant, the sum of Rs. 32,500 realised by the appellant from his wife would at least ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Tribunal. On these facts, Mr. B. P. Rajgarhia, senior standing counsel for the. Revenue, has submitted that the Tribunal has committed an error of law in excluding the value of 10 shares of M/s. Seraikella Glass Works Private Limited transferred by the assessee to his wife in computing the net wealth of the assessee. In this case, the assessee has not appeared to contest the case and so the argument has been heard ex parte on behalf of the Revenue and the case is being disposed of ex parte on the argument made on behalf of the Revenue. Mr. B. P. Rajgarhia has invited our attention to the order of the Income-tax Appellate Tribunal in W.T.A. No. 4 (Pat) of 1970-71 relating to the assessment year 1966-67, which clearly shows that the assessee was holding some shares of the Seraikella Glass Works Private Limited and that the shares of the company were not quoted. The assessee valued the shares at the rate of Rs. 3,250 per share. The Wealth-tax Officer found that the valuation made by the assessee was low and, accordingly, he took the valuation of the shares at Rs. 8,666.58. On appeal, the Appellate Assistant Commissioner allowed a little relief to the assessee and determined the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the shares were transferred for adequate consideration and so section 64(1)(iii) was not applicable in the present case. It cannot be doubted that in the wealth-tax assessment for the assessment year 1966-67, the assessee himself showed the value at Rs. 6,378 per share and this valuation was treated as fair. In I.T.A. No. 21857 of 1967-68 for the assessment year 1966-67, the basis of yield has not been given when in the wealth-tax assessment, the valuation per share of M/s. Seraikella Glass Works Private Limited has been taken at Rs. 6,378 as fair. It does not stand to reason how the valuation can be held to be for adequate consideration at least under the Act. On the very finding in W.T.A. No. 4 (Pat) of 1970-71, if the valuation of M/s. Seraikella Glass Works Private Limited has been taken at Rs. 6,378 per share, it does not stand to reason as to how in the wealth-tax assessment, for 10 shares of the same company transferred by the assessee to his wife, a different valuation can be taken and it can be held that the transfer was for adequate consideration. Of course, section 64(1)(iii) of the Income-tax Act, as it was in force in the assessment year 1966-67, was to the effe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R 137, which is a decision of the Patna High Court, where the provisions of section 16(3)(a)(iii) of the Indian Income-tax Act, 1922, were considered and in that connection, it was held that the transfers by a husband to his wife of assets otherwise than for adequate consideration, cover all transfers in the nature of gifts or transfers made purely on the ground of natural love and affection. It has also been held in this decision that the word " consideration " appearing in section 16(3)(a)(iii) is used in its legal sense as it is used in connection with the transfer of assets. It has also been observed that the word has not been defined in the Transfer of Property Act and it must be given a meaning similar to the meaning which it has in the Indian Contract Act. It has also been observed by this court that as " natural love and affection " is not consideration in the eye of the law, transfer on account of natural love and affection is not a transfer for consideration adequate or otherwise, but is in effect a gift by one party bearing love and affection to the other. It has also been held by this court that the words " adequate consideration " used in section 16(3)(a)(iii) do not m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sferred directly or indirectly to the wife by the husband otherwise than for adequate consideration. Thus, it is evident that section 16(3)(a)(iii) of the Indian Income-tax Act, 1922, section 64(1)(iii) of the Income-tax Act and section 4(l)(a)(i) of the Act contain similar provisions and so the aforesaid decision will be applicable in all cases as mentioned above. Mr. B. P. Rajgarhia has also referred to the case of Smt. V. Amirtham Ammal v. CIT[1976] 102 ITR 350 (Mad). In this decision, the assessee transferred 110 shares in a private limited company to the minor son of B. S., who transferred 115 shares in the company to the minor son of R.S., who in turn transferred 110 shares in the company to the minor son of the assessee. All the transfers were effected on the same date. The Incometax Officer took the view that these transfers were cross-transfers hit by the provisions of section 64(iv) of the Income-tax Act and that the transfers were not for adequate consideration, and included the entire dividend income in respect of the shares transferred by the assessee as the income derived by her minor son from and out of the shares transferred indirectly to him. This was confirmed by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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