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1997 DIGILAW 1237 (MAD)

Commissioner of Gift Tax v. Padma Santhanam

1997-11-05

N.V.BALASUBRAMANIAN, P.THANGAVEL

body1997
Judgment :- N. V. BALASUBRAMANIAN, J. The assessee is a holder of shares in Sundaram Industries Ltd., Madras, and she made a gift of 4, 000 shares to individual trusts. In the original assessment made for the assessment year 1974-75, the value of the shares was determined at Rs. 121 per share. The Gift-tax Officer subsequently, on the basis of the Board's circular dated October 29, 1974, came to the conclusion that rule 10(2) of the Gift-tax Rule, 1958, does not permit 15 per cent. deduction which was given in the original assessment and, therefore, the assessment was liable to be reopened. After giving notice to the assessee, he reopened the assessment and determined the value of the shares at Rs. 142.30 per share The assessee preferred an appeal before the Commissioner of Income-tax (Appeals) and the Commissioner of Income-tax (Appeals) came to the conclusion that there are two methods of valuation and since the Gift-tax Officer adopted one method of valuation during the course of original assessment, it is not open to him to adopt another method of valuation in the reassessment proceedings and, therefore, the reassessment done by the Gift-tax Officer was liable to be cancelled. The Commissioner of Income-tax (Appeals) held that there was no jurisdiction to reopen the completed assessment The Revenue preferred an appeal before the Appellate Tribunal. The Appellate Tribunal, following its earlier order in GTO v. Miss Malini Srinivasan (G. T. A. No. 55 (Mds) of 1979, G. T. A. No. 57 (Mds) of 1979 and 58 (Mds) of 1979, dated August 26, 1980), came to the conclusion that the reopening of assessment was invalid. It is this order which is the subject-matter of the present tax case reference. It is this order which is the subject-matter of the present tax case reference. The Appellate Tribunal has stated a case and referred the following question of law for our opinion in pursuance of the direction of this court under section 26(3) of the Gift-tax Act, 1958 "Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in cancelling the reassessment made under section 16(1)(b) of the Gift-tax Act, 1958, for the assessment year 1974-75 as bad in law ?" The earlier order of the Appellate Tribunal in the cases (G. T. A. No. 55 (Mad) of 1979, G. T. A. No. 57 (Mds) of 1979 and G. T. A. No. 58 (Mds) of 1979), came up for consideration before us in T. C. Nos. 1215 to 1217 of 1984 in CGT v. Nalini Srinivasan 1999 (238) ITR 592, 1998 (149) CTR 187 (Mad) and we have, by judgment of even date held that the reopening of assessment was not valid in the eye of law. In the instant case, the Gift-tax Officer refused to grant 15 per cent. deduction which was originally granted in the earlier assessment. This court in the case of CGT v. Sundaram Industries Ltd. 1996 (222) ITR 710, 1997 (141) CTR 213 held that the provisions of rule 1D of the Wealth-tax Rules would equally apply for the purpose of valuation of shares for gift-tax and if the said rule 1D of the Wealth-tax Rules is applicable, the assessee is entitled to the deduction provided under the said rule. This court in the above cited case held that the assessee would be entitled to the discount of 30 per cent. But, in the instant case, the Gift-tax Officer originally deducted 15 per cent and the assessee has not challenged the same and therefore, that part of the order has become final. As we have already held that the provisions of rule 1D of the Wealth-tax Rules would be applicable to determine the assessable gift for the purpose of gift-tax also, we find that there is no underassessment in the original assessment which compelled the Gift-tax Officer to reopen the assessment by invoking the provisions of section 16(1)(b) of the Gift-tax Act. As we have already held that the provisions of rule 1D of the Wealth-tax Rules would be applicable to determine the assessable gift for the purpose of gift-tax also, we find that there is no underassessment in the original assessment which compelled the Gift-tax Officer to reopen the assessment by invoking the provisions of section 16(1)(b) of the Gift-tax Act. Accordingly, we are of the view that there is no infirmity in the order of the Appellate Tribunal and there is no error of law committed by the Appellate Tribunal in coming to the conclusion that the reassessment under section 16(1)(b) of the Act was not valid in the eye of lawIn fine, we answer the question of law referred to us in the affirmative and against the Revenue. However, in the circumstances of the case, there will be no order as to costs.