JUDGMENT Jawahar Lal Gupta, J. (Oral) - The Income Tax Appellate Tribunal has referred the following question of this Court :- "Whether, on the facts and circumstances of the case, the Tribunal was right in holding that in valuing the unquoted shares of M/s. Kakkar Steel Complex (P) Ltd. for the purposes of working out the value of the deemed gift on 20.3.1979, reference should be made to the balance-sheet of the said company as on 31.3.1978 and not to the balance-sheet as on 31.3.1979 ?" 2. The relevant facts may be briefly noticed. On March 20, 1979 the assessee sold 250 shares of M/s. Kakkar Complex Steels (P) Ltd. to M/s. Naval Kumar and Vipan Kumar for a consideration of Rs. 2,50,000/-. Each share had a face value of Rs. 1,000/-. The Inspecting Assistant Commissioner vide his assessment order dated March 5, 1983 held that "the market value of shares even if worked out with yield method not be less than Rs. 2199/- per share." Thus, she came to the conclusion that the shares had been "transferred for a consideration, which is much below the market value." As a result, she held that "Gift Tax under Section 4(1)(a) is attracted." Thus, the assessee was held liable to pay Gift Tax. 3. The assessee filed an appeal before the Commissioner of Gift Tax (Appeals), Jalandhar. The plea of the assessee that the valuation of the shares should have been fixed with reference to the balance-sheet available on the date of sale, viz. March 20, 1979 and not with reference to the balance-sheet of a later date, was accepted. It was held that the sale having taken place on March 20, 1979, the value of the shares had to be fixed with reference to the balance-sheet as on March 31, 1978 and not as on March 31, 1979. The Gift Tax Officer was accordingly directed to determine the element of gift and tax due on the hypothes is that the value of each share was Rs. 1115/-. 4. The Revenue challenged the order of Commissioner of Gift Tax (Appeals) before the Income Tax Appellate Tribunal. It contended that the sale transaction had taken place on March 31, 1979 and thus, the value of each share had to be fixed on the basis of the balance-sheet as on March 31, 1979. 1115/-. 4. The Revenue challenged the order of Commissioner of Gift Tax (Appeals) before the Income Tax Appellate Tribunal. It contended that the sale transaction had taken place on March 31, 1979 and thus, the value of each share had to be fixed on the basis of the balance-sheet as on March 31, 1979. The Tribunal on a consideration of the matter held that the sale had taken place on March 20, 1979. It upheld that order of the Commissioner of Gift Tax and dismissed the appeal filed by the Revenue. While doing so, the Tribunal placed reliance on its earlier decision in the case of The Commissioner of Gift-tax, Jalandhar v. Shri Ripan Kumar. Aggrieved by the order, the Revenue made a petition for reference. It was allowed. 5. It is in these circumstances that the present reference has been made to this Court. 6. Shri Sawhney, learned counsel for the Revenue, has vehemently contended that the view taken by the Tribunal is erroneous. The Assessing Officer had rightly determined the value of the shares on the basis of the balance-sheet as on March 31, 1979. 7. No one has put in appearance on behalf of the assessee. 8. Section 4 of the Gift-Tax Act, 1958, inter alia, provides that "where property is transferred otherwise than for adequate consideration, the amount by which the value of the property ........exceeds that value of the consideration shall be deemed to be a gift made by the transferor." Thus, by fiction of law, the difference between the ostensible sale price and the value as determined by the authority, is treated as a gift. The provision has obviously been made by the Parliament to impose tax in cases where transfer is made for a value less than the actual by the transferor. Yet the question that remains is - How is the value to be fixed ? 9. For the purpose of fixation of value, the counsel relied upon the provision of Rule 1D of the Wealth-Tax Rules, 1957. The Rule at the relevant time, inter alia, provided that "the market value of an unquoted equity share of any company, other than an investment company or a managing agency company" has to be determined with reference to the balance-sheet. The Rule at the relevant time, inter alia, provided that "the market value of an unquoted equity share of any company, other than an investment company or a managing agency company" has to be determined with reference to the balance-sheet. Explanation 1 to the Rule provided as under :- "For the purposes of this rule, "balance-sheet", in relation to any company, means the balance-sheet of such company as drawn up on the valuation date and where there is no such balance-sheet, the balance-sheet drawn up on a date immediately preceding the valuation date and in the absence of both, the balance-sheet drawn up on a date immediately after the valuation date." A perusal of the above Explanation shows that the relevant balance-sheet is the one existing on the valuation date and where there is no such balance-sheet, reference has to be made to the one drawn upon on a date immediately preceding the valuation date ........" It is, thus, drawn that the valuation has to be fixed on the basis of the balance-sheet which exists on the date of the transaction. 10. What is the position in the present case ? It has been held by the Tribunal that the shares had been transferred on March 20, 1979. Admittedly, the balance-sheet as on March 31, 1979 did not exist on that date. Thus, the valuation had to be fixed on the basis of the balance-sheet which existed immediately prior to March 20, 1979. Necessarily, the valuation had to be fixed on the basis of the balance-sheet as on March 31, 1978. This is precisely what the Tribunal has done. 11. Mr. Sawhney referred to the decision of the Mysore High Court in Court in Controller of Estate Duty, Mysore v. J. Krishna Murthy, (1974)96 I.T.R. 87. Necessarily, the valuation had to be fixed on the basis of the balance-sheet as on March 31, 1978. This is precisely what the Tribunal has done. 11. Mr. Sawhney referred to the decision of the Mysore High Court in Court in Controller of Estate Duty, Mysore v. J. Krishna Murthy, (1974)96 I.T.R. 87. On a perusal of the judgment we find that the following question had been referred to the Court for its opinion :- "When, for the Wealth-tax Act, valuation of unquoted shares as on 31st March, 1967, has to be done in accordance with the Wealth-tax (Amendment) Rules, 1967, taking the last published balance-sheet as on 31st December, 1966, as the basis, whether the Tribunal is right in placing the same value as on September 11, 1967, the date of the death of the deceased for the purpose of estate duty assessment resulting in non-consideration of other items not covered by the Wealth-tax Rules going into the determination of the value of shares for estate duty purposes ?" This question was answered in the affirmative and against the Revenue. It was, inter alia observed that "the only published information concerning the company on March 31, 1967, as well as September 11, 1967, is its published balance-sheet as at December 31, 1966, which alone could be relied on for purposes of valuation whether on March 31, 1967, or September 11, 1967." Similar is the position in the present case. The Tribunal has placed reliance on the balance-sheet as on March 31, 1978 as that was the only existing material on the date of the transaction, viz. March 20, 1979. This judgment does not support the case of the Revenue in any manner. 13. Mr. Sawhney then referred to the decision of the Madras High Court in Commissioner of Gift-Tax v. K. Ramesh, 141 I.T.R. 462. March 20, 1979. This judgment does not support the case of the Revenue in any manner. 13. Mr. Sawhney then referred to the decision of the Madras High Court in Commissioner of Gift-Tax v. K. Ramesh, 141 I.T.R. 462. In this case it was undoubtedly held that "even though the balance-sheet as on March 31, 1972, was subsequent to the date of the gift, it could not be disregarded because it was not far removed from the date of gift and there may have been several developments affecting the net worth of the company and thereby affecting the value of the individual shares between the two balance-sheets as on March 31, 1971, and March 31, 1972." The order of the Tribunal which was based on the balance-sheet of March 31, 1971 was thus, set aside and the matter was remanded for fresh decision. However, we find that a contrary view had been taken in the case of Commissioner of Gift-Tax Kerala-I v. H.H. Sethu Parvathi Bai, [1984]145 I.T.R. 124. In this case it was categorically held that "for the gift of shares made by the assessee on March 25, 1971, the value shown in the balance-sheet of the company as on March 31, 1970, should be taken as the proper value. Similarly in Commissioner of Gift-Tax, Gujarat v. Executors and Trustees of the State of Late Shri Ambalal Sarabadi, [1975]100 I.T.R. 447, it was held that "since the only balance-sheet which was available at the date of the gift, namely, October 17, 1964, was the balance-sheet of March 31, 1963, the break-up value method could be applied only in the light of the balance-sheet as on March 31, 1963......" Reliance was placed by the Bench on the decision of the House of Lords in Lynall and another v. Inland Revenue Commissioners, [1972]83 I.T.R. 563. We are in respectful agreement with the view expressed by the Kerala and Gujarat High Courts. Why ? 14. Section 6 of the Act categorically provides that the "value of any property, other than cash, transferred by way of gift shall ......be its value as on the date on which the gift was made....." The provision clearly contemplates that the value has to be as on the date of the gift. It cannot be determined with reference to any evidence relating to a subsequent date. It cannot be determined with reference to any evidence relating to a subsequent date. Thus, the view taken by the Madras High Court that reference could be made to the balance-sheet prepared on a subsequent date, does not, with respect, commend itself to us. This is the import of Rule 1D also. 15. Still further, it deserves mention that in the present case the deemed gift had been made on March 20, 1979. The value has to be seen on that date. The balance-sheet as on March 31, 1979 did not exist on that date. In fact, learned counsel for the Revenue was unable to refer to any evidence to indicate as to when it had been actually prepared. In this situation, the view taken by the Tribunal is absolutely in conformity with law. 16. No other point has been raised. 17. In view of the above, the question as referred by the Tribunal, is answered in the affirmative and in favour of the assessee. It is held that for working out the value of the deemed gift to March 20, 1979, reference could be made to the balance-sheet of the company as on March 31, 1978 and not to the balance-sheet as on March 31, 1979. 18. Since no one has appeared on behalf of the respondent-assessee, there will be no order as to costs. Reference answered.