JUDGMENT : G.T. Nanavati, J. Both these references are in respect of the same assessee and the same assessment year. Both of them are, therefore, disposed of by this common judgment. 2. The assessee gifted 8,000 shares of Gaskets and Radiators Private Limited to three family members on April 28, 1976. The shares were transferred in the names of the trustees on December 28, 1976. The assessee filed the gift-tax return and valued the shares at the rate of Rs. 243 per share following the break-up value method. For that purpose, the assessee had adopted the balance-sheet of the company as at December 31, 1974, that being the last audited balance-sheet of the company on the day on which the gifts were made. The Gift-tax Officer was of the view that the break-up value was required to be ascertained on the basis of the balance- sheet as at December 31, 1975, as the shares were transferred in the names of the trustees in the name of the trust on December 28, 1976, and by that time, the balance-sheet as at December 31, 1975, was available. He was also of the view that the goodwill was required to be taken into consideration while calculating the total assets. Taking this view, he worked out the value of the shares at Rs. 402.22 and assessed the gift-tax accordingly. The assesse appealed to the Commissioner of Gift-tax (Appeals). The Commissioner was of the view that gift of the shares can be said to have been made on April 28, 1976, and not on December 28, 1976, as held by the Gift-tax Officer and, therefore, the balance-sheet as at December 31, 1974, was required to be adopted as the basis for valuing the shares. As regards the correct method for valuation of shares, the Commissioner held that shares should be valued by taking the average of the value arrived at on the breakup value method as well as on the yield method and that the value should be discounted by ten per cent. in view of the impediment in transfer of shares. He confirmed the view of the Gift-tax Officer that goodwill was required to be added to the total value of the assets of the company. On this basis, the Commissioner worked out the break-up value of shares at Rs. 351 and after discounting the same at ten per cent. in view of the impediment in transfer of shares. He confirmed the view of the Gift-tax Officer that goodwill was required to be added to the total value of the assets of the company. On this basis, the Commissioner worked out the break-up value of shares at Rs. 351 and after discounting the same at ten per cent. arrived at the figure of Rs. 325 per share. He worked out the value of shares on yield method at Rs. 261 per share and after giving discount of ten per cent., arrived at the figure of Rs. 235. Thereafter, he took the average of these two valuations and held that the shares gifted should be valued at Rs. 280 per share. The Revenue, feeling aggrieved by the said order of the Commissioner, preferred an appeal to the Tribunal. The assessee filed cross-objections. Before the Tribunal, it was contended by the Revenue that valuation of shares should have been made on the basis of the break-up value method and, for that purpose, reliance was also placed on rule 10 of the Gift-tax Rules. The Revenue also contended that there was no justification for giving deduction of ten per cent. As against that, it was contended by the assessee that the value of shares should have been worked out by adopting the yield or profit-earning method as the company was a running concern. It was also urged that goodwill could not have been added to the assets of the company as the same was not shown as an asset in the balance-sheet. The Tribunal confirmed the finding of the Commissioner that the gifts of shares were made on April 28, 1976, and not on December 28, 1976. The Tribunal rejected the contention of the assessee that the correct method of valuation to be applied was the yield or profit-earning method and held that the shares were required to be valued according to the break-up method. As regards inclusion of goodwill in the total assets of the company, the Tribunal held that as the goodwill was not indicated as an asset in the balance-sheet, it cannot be considered while determining the total assets of the company as that would mean revaluation of the assets of the company. As regards inclusion of goodwill in the total assets of the company, the Tribunal held that as the goodwill was not indicated as an asset in the balance-sheet, it cannot be considered while determining the total assets of the company as that would mean revaluation of the assets of the company. The Tribunal also held that there was no justification to depress the value of shares on the ground of transferability, firstly, because, while valuing the shares of the company, the same was irrelevant and also because there was no evidence to show that effect of restriction on transfer was to depreciate the value of shares. In the result, the Tribunal partly allowed the appeal of the Revenue and also partly allowed the cross-objections filed by the assessee. 3. Both the Revenue and the assessee were aggrieved by the decision of the Tribunal and, therefore, they moved the Tribunal for referring the following questions of law to this court : "(1) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in following the method involving the principle of break-up value instead of the method involving the principle of yield value in determining the value of the shares of Gaskets and Radiators Private Limited under section 6 of the Gift-tax Act ? (2) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the provisions of rule 10(2) of the Gift-tax Rules, 1958, were applicable for the purpose of valuing the shares of Gaskets and Radiators Private Limited and that, therefore, the said shares should be valued by adopting the break-up value method ? (3) Whether, on the facts and in the circumstances of the case, the Tribunal was right in rejecting the submission of the assessee that the market value of the shares of Gaskets and Radiators Private Limited which was a running concern should have been worked out at Rs. 234 by adopting the profit-earning method ? (3) Whether, on the facts and in the circumstances of the case, the Tribunal was right in rejecting the submission of the assessee that the market value of the shares of Gaskets and Radiators Private Limited which was a running concern should have been worked out at Rs. 234 by adopting the profit-earning method ? (4) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that there was no justification to depress the value of the shares of Gaskets and Radiators Private Limited in view of the restrictive provisions on the transfer of shares ?" (G. T. R. No. 2 of 1981) : "(1) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that, for the purpose of gift-tax, the share was transferred on April 28, 1976, and not on December 28, 1976, when the transfer was actually recorded in the books of the company ? (2) Whether, on the facts and in the circumstances of the case, for determining the break-up value of shares which were the subject-matter of gift, the relevant balance-sheet of the company to be considered would be the one as on December 31, 1974 ? (3) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that there was no justification to add goodwill to the assets of the company while working out the value of shares gifted ?" 4. Questions which are referred to this court in G. T. R. No. 1 of 1981 are at the instance of the assessee and the questions in G. T. R. No. 2 of 1981 are referred at the instance of the Revenue. 5. What is contended by learned counsel for the assessee is that, as held by the Supreme Court, the break-up value method is not the correct method to be applied in such cases and the correct method of valuation is the yield method or profit-earning method. He drew our attention to a decision of this court in CGT v. Executors and Trustees of the Estate of Late Shri Ambalal Sarabhai [1975] 100 ITR 447. In that case, shares of an English company equivalent to a private limited company under the Indian Companies Act were given as gift by the assessee to his family members. He drew our attention to a decision of this court in CGT v. Executors and Trustees of the Estate of Late Shri Ambalal Sarabhai [1975] 100 ITR 447. In that case, shares of an English company equivalent to a private limited company under the Indian Companies Act were given as gift by the assessee to his family members. In the return filed by the assessee, the value of shares was declared following the break up method. The Gift-tax Officer accepted that method of valuation as the correct method and this was accepted even by the Appellate Assistant Commissioner in appeal and by the Tribunal. There was almost a consensus between the assessee and the Department that shares were required to be valued according to the break up method. The dispute between the assessee and the Revenue was as to which was the nearest balance-sheet in point of time that was required to be considered for ascertaining the total assets of the company. Before the High Court also, there was no dispute as regards the correct method of valuation. This court, after referring to section 6 of the Act and rule 10(2) of the Gift-tax Rules, 1958, held that the value of shares was required to be ascertained by reference to the value of the total assets of the company. If that could be so ascertained, then it was to be ascertained only in that manner. If it could not be ascertained by valuation of the total assets of the company, then, an estimate has to be made as to at what value the shares would have been valued if, on the date of the gift, they could be sold in the open market. This court further observed that it was not shown as to why in the case of that particular company which was a private company, the articles of association of which contained restrictive provisions as to the alienation of shares, the value of shares is not ascertainable by reference to the value of the total assets of the company. Taking this as the correct legal position, this court observed that it was common ground that the value of the shares was required to be ascertained by following the break-up value method. 6. Taking this as the correct legal position, this court observed that it was common ground that the value of the shares was required to be ascertained by following the break-up value method. 6. Learned counsel then submitted that the decision of this court in that case has been held to be bad and the correct position in law is not what has been pointed out by this court. While dealing with an appeal against that decision, the Supreme Court in CGT v. Executors and Trustees of the Estate of Late Shri Ambalal Sarabhai [1988] 170 ITR 144, held that the correct method of valuation in determining the value of the kind of shares concerned is the profit method and not the break-up value method. Learned counsel, therefore, submitted that, in view of the said decision of the Supreme Court, it should be held that the authorities and the Tribunal were wrong in applying the principle of break-up value while determining the value of shares and it should be held that in this case also, the correct method applicable is the yield method or profit-earning method. 7. Learned counsel for the Revenue, however, drew our attention to section 6 of the Act and rule 10(2) of the Gift-tax Rules. Section 6 as it stood then read as under : "6. Value of gifts, how determined. - (1) The value of any property other than cash transferred by way of gift, shall, subject to the provisions of sub-sections (2) and (3), be estimated to be the price which in the opinion of the Assessing Officer, it would fetch if sold in the open market on the date on which the gift was made. (2) Where a person makes a gift which is not revocable for a specified period, the value of the property gifted shall be the capitalised value of the income from the property gifted during the period for which the gift is not revocable. (3) Where the value of any property cannot be estimated under sub-section (1) because it is not saleable in the open market, the value shall be determined in the prescribed manner." 8. (3) Where the value of any property cannot be estimated under sub-section (1) because it is not saleable in the open market, the value shall be determined in the prescribed manner." 8. Rule 10(2) as it stood then was as under : "(2) Where the articles of association of a private company contain restrictive provision as to the alienation of shares, the value of the shares, if not ascertainable by reference to the value of the total assets of the company, shall be estimated to be what they would fetch if on the date of gift they could be sold in the open market on the terms of the purchaser being entitled to be registered as holder subject to the articles, but the fact that a special buyer would for his own special reasons give a higher price than the price in the open market shall be disregarded." 9. He submitted that, in cases where it is not possible to ascertain the value of the gift by reference to its value in the open market, then sub- section (3) of section 6 would be attracted and valuation shall have to be determined in the prescribed manner. He submitted that the manner prescribed in this behalf is as contained in rule 10. Therefore, in cases of this type, the value of the shares has to be, in the first instance, ascertained by reference to the value of the total assets of the company. If it is not possible to ascertain the value in that manner, then only the other method indicated in the rule has to be applied. He further submitted that the Supreme Court, while deciding the appeal in Ambalal Sarabhai's case [1988] 170 ITR 144, did not refer to and consider the effect of rule 10. What has been held by the Supreme Court in that case is on the basis of what it has earlier held in the case of CWT v. Mahadeo Jalan [1972] 86 ITR 621 (SC) and CGT v. Smt. Kusumben D. Mahadevia [1980] 122 ITR 38 (SC). The case of Mahadeo Jalan [1972] 86 ITR 621 (SC), arose under the Wealth-tax Act and the relevant provisions of the Wealth-tax Act did not provide for any prescribed manner or procedure and for that reason, there was no rule like rule 10 of the Gift-tax Rules. The case of Mahadeo Jalan [1972] 86 ITR 621 (SC), arose under the Wealth-tax Act and the relevant provisions of the Wealth-tax Act did not provide for any prescribed manner or procedure and for that reason, there was no rule like rule 10 of the Gift-tax Rules. He further submitted that in Kusumben's case [1980] 122 ITR 38, the Supreme Court did not consider the effect of rule 10 and kept that question open. For that reason, the decision of the Supreme Court in Ambalal Sarabhai's case [1988] 170 ITR 144, should be regarded as per incuriam. 10. As stated earlier, this court in terms referred to rule 10 and held that the stand taken by the assessee and the Department as regards the correct method of valuation was proper. This view taken by this court was held to be bad by the Supreme Court. The Supreme Court has in terms held that the view of the High Court cannot be said to reflect the position of law correctly. It is, therefore, not possible to accept the contention raised on behalf of the Revenue that the decision of the Supreme Court in Ambalal Sarabhai's case [1988] 170 ITR 144, should be regarded as per incuriam. In our opinion, there is no alternative but to follow the decision and hold that the Tribunal was wrong in rejecting the submission of the assessee that the market value of shares of Gaskets and Radiators Private Limited which is a running concern should have been worked out at Rs. 234 by adopting the profit-earning method. We should not be understood as having said that, on adoption of the profit-earning method, the valuation of shares at Rs. 234 is proper. That will have to be worked out after adopting the profit-earning method by the concerned authorities. 11. In the result, questions Nos. 1, 2 and 3 in G. T. R. No. 1 of 1981 are answered in the negative, i.e., in favour of the assessee and against the 12. Revenue. In the view that we have taken, question No. 4 does not call for an answer and, therefore, we decline to answer the same. In G. T. R. No. 2 of 1981, question No. 1 is answered in the affirmative, i.e., against the Revenue and in favour of the assessee. Questions Nos. Revenue. In the view that we have taken, question No. 4 does not call for an answer and, therefore, we decline to answer the same. In G. T. R. No. 2 of 1981, question No. 1 is answered in the affirmative, i.e., against the Revenue and in favour of the assessee. Questions Nos. 2 and 3 do not call for any answer and, therefore, we decline to answer the same. Both the references are disposed of accordingly with no order as to costs.