Judgment Mehinder Singh Sullar, J. 1. As common question of law and facts are involved, therefore, we propose to dispose of all the above-mentioned four appeals, by this judgment, in order to avoid repetition of facts. However, for facilitation, the facts have been extracted from Gift Tax Appeal No.2 of 1999, titled "commissioner of Gift Tax (Central), ludhiana V/s. M/s Rockman Cycle Industries (P) Ltd. , Ludhiana". 2. The brief facts, relevant for disposal of present appeals and emanating from the record, are that during the period of assessment years 1986- 87, the assessee purchased redeemable non-cumulative preference shares of Rs.100/- each for Rs.50,00,000/- of Hero Investments Private Limited, Ludhiana. The shares purchased were 4% non-cumulative preference shares even if the dividend was declared in any year, the yield from these shares was only 4%. The market value of the shares did not exceed Rs.30/- per share and the assessee paid Rs.70/-per share in excess of the market value. Therefore, the Assessing Authority treating it to be a case of escaped assessment of taxable gift, issued notice under section 16 (1) (a) of the Gift Tax Act, 1958 (for brevity "the Act"). 3. In the wake of notice, the assessee filed the return, declaring the value of taxable gift as Nil. However, in a note accompanying the return, it was explained that the company was allotted 50000 - 4% redeemable non-cumulative preference shares at the rate of Rs.100/- each at par of M/s Hero Investment private Limited and since the shares could not be issued by the company below their face value as per section 69 of the Companies Act, 1956 , so no taxable gift was involved. The explanation put forth by the assessee did not find favour and the Assessing Authority accordingly imposed the gift tax, vide order dated 27.12.1990 (Annexure A2). 4. The appeal filed by the assessee was accepted by the Commissioner of Gift tax (Appeals) (Central), vide order dated 13.12.1991 (Annexure A3). 5. Aggrieved by the order Annexure A3, the appeal filed by the Revenue was also dismissed by the Income Tax Appellate Tribunal, vide order dated 28.10.1998 (Annexure A1). 6. The Revenue still did not feel satisfied with the impugned order (Annexure a1) and filed the instant appeal. 7. 5. Aggrieved by the order Annexure A3, the appeal filed by the Revenue was also dismissed by the Income Tax Appellate Tribunal, vide order dated 28.10.1998 (Annexure A1). 6. The Revenue still did not feel satisfied with the impugned order (Annexure a1) and filed the instant appeal. 7. The following question arose for determination in this matter:- "whether on the facts and circumstances of the case the ITAT was right in law in confirming the order of the cgt (A) (C), Ludhiana and holding that the transaction of 50,000/- - 4% non-cumulative preference shares at the face value of Rs.100/-, the market value of which did not exceed Rs.30/- per share, did not involve any gift. " 8. We have heard the learned counsel for the parties and have gone through the material on record and relevant provisions of law with their valuable help. 9. Above being the position, now the core question, that arises for determination is, whether the transaction of 50000 4% non-cumulative preference shares at the face value of Rs.100/- each, the market value of which, did not exceed Rs.30/- per share, would involve any gift tax under section 4 (1) (a) of the Act or not. Thus, it be seen that the facts of the case are neither intricate nor much disputed. 10. Assailing the impugned order, the learned counsel for the Revenue has contended with some amount of vehemence that since the worth of the shares acquired by the assessee was not more than Rs.30/- per share and the investment of balance amount would be deemed to be a gift and liable to gift tax. 11. Hailing the impugned order, on the contrary, the learned counsel for the assessee has urged that the assessee was the original buyer of shares directly from the company and as per section 69 of the Companies Act, no allotment shall be made of any share of the company on discount. In that eventuality, the question of element of gift, during the period of relevant assessment year, did not arise at all. In order to support of his contention, he has placed reliance on the judgment of Honble Supreme Court in case Khoday Distilleries Ltd. V/s. Commissioner of Income-tax and another [2008] 307 ITR 312 (SC). 12. In that eventuality, the question of element of gift, during the period of relevant assessment year, did not arise at all. In order to support of his contention, he has placed reliance on the judgment of Honble Supreme Court in case Khoday Distilleries Ltd. V/s. Commissioner of Income-tax and another [2008] 307 ITR 312 (SC). 12. After hearing the learned counsel for the parties, we are of the view that as element of gift is lacking, therefore, the transaction in question is not liable to gift tax. 13. Section 3 of the Act postulates the liability to charge gift-tax and section 2 (xii) of the Act defines "gift" means the transfer by any person to another of any existing movable or immovable property made voluntarily and without consideration in money or moneys worth, and [includes the transfer or conversion of any property referred to in section 4, deemed to be a gift under that section]. "Explanation to this clause is that "a transfer of any building or part thereof referred to in clause (iii), clause (iiia) or clause (iiib) of section 27 of the Income tax Act by the person who is deemed under the said clause to be the owner thereof made voluntarily and without consideration in money or moneys worth, shall be deemed to be a gift made by such person. " 14. Sequelly, section 2 (xxiv) of the Act posits that "transfer of property" means any disposition, conveyance, assignment, settlement, delivery, payment or other alienation of property and, without limiting the generality of the foregoing, includes-- (a) the creation of a trust in property; (b) the grant or creation of any lease, mortgage, charge, easement, licence, power, partnership or interest in property; (c) the exercise of a power of appointment [ (whether general, special or subject to any restrictions as to the persons in whose favour the appointment may be made)] of property vested in any person, not the owner of the property, to determine its disposition in favour of any person other than the donee of the power; and (d) any transaction entered into by any person with intent thereby to diminish directly or indirectly the value of his own property and to increase the value of the property of any other person." 15. Section 4 (1) (a) of the Act reads as under:- "4. Section 4 (1) (a) of the Act reads as under:- "4. Gifts to include certain transfers.- (1) For the purposes of this Act, - (a) where property is transferred otherwise than for adequate consideration, the amount by which the [value of the property as on the date of the transfer and determined in the manner laid down in Schedule II] exceeds the value of the consideration shall be deemed to be a gift made by the transferor : [provided that nothing contained in this clause shall apply in any case where the property is transferred to the government or where the value of the consideration for the transfer is determined or approved by the Central government or the Reserve Bank of India." 16. The combined reading of these provisions would reveal that only that property (transaction), which is transferred otherwise than for adequate consideration, the amount of which, exceeds the value of the consideration at the relevant time, would be liable to gift tax. As per proviso to section 4 (1) (a), even transfer of such property/transaction where the value of the consideration for the transfer is determined or approved by the Central government or the Reserve Bank of India, is not leviable to gift tax. It means, actually the value of transferred property had to be considered on the relevant date and section 4 (1) (a) would not apply where the consideration for the transfer is approved by Central Govt. 17. An identical question arose before the Honble Apex Court in case Khoday distilleries Ltd. s (supra ). In that case, the assessee-company allotted all the rights shares to other share holders. The Assessing Officer held that the allotment of the rights shares was without adequate consideration and there was deemed gift under section 4 (1) (a) of the Act, of the difference between the value of the shares on yield basis and their face value. On appeal, the commissioner (Appeals) was of the view that gift-tax proceedings ought to have been initiated against those shareholders who had renounced their rights, but he upheld the assessment against the assessee-company. On further appeal, the appellate Tribunal reversed the decision, holding that the allotment of rights shares did not constitute "transfer" and there was no element of gift as there was no "transfer" under section 2 (xxiv ). On appeal, the High Court held in favour of the Department. 18. On further appeal, the appellate Tribunal reversed the decision, holding that the allotment of rights shares did not constitute "transfer" and there was no element of gift as there was no "transfer" under section 2 (xxiv ). On appeal, the High Court held in favour of the Department. 18. In the wake of further appeal by the assessee, having considered the relevant provisions of section 4 (1) (a) vis-a-vis section 2 (xii) and (xxiv) of the Act, Honble Apex Court ruled that "it was only an allotment that the share came into existence, and the words "allotment of shares" were used to indicate the creation of shares by appropriation out of unappropriated share capital to a particular person. It was observed that there was a vital difference between "creation" and "transfer" of shares. The allotment by the assessee of all the rights shares was not a "transfer" and, therefore, section 4 (1) (a) was not applicable. " It was also held that "allotment is not transfer. There is no element of existing right in the case of allotment as required by section 2 (xii ). 19. Again, the Honble Supreme Court in case Sri Gopal Jalan and Co. V/s. Calcutta Stock Exchange Association Ltd. AIR 1964 Supreme Court 250 has held that "in Company law allotment means the appropriation, out of the previously unappropriated capital of a company, of a certain number of shares to a person. Till such allotment the shares do not exist as such. It is on allotment in this sense that the shares come into existence. " The ratio of Honble Apex Court "mutatus-mutandi" is applicable to the facts of the present case. 20. It is not a matter of dispute that in the instant case, during the period of assessment years 1986-87, the assessee purchased redeemable non- cumulative preference shares at the face value of Rs.100/- each with a return of 4%, directly from M/s Hero Investment Private Limited. The memorandum of association had been approved by the Registrar of Companies. Thus, a subscriber to the share capital of the Company acquired no interest in the property, because at that stage, no transfer was involved but the shares became property only after allotment, particularly when as per the specific prohibition contained in section 69 of the Companies Act that such company could not issue the shares at a discount. 21. Thus, a subscriber to the share capital of the Company acquired no interest in the property, because at that stage, no transfer was involved but the shares became property only after allotment, particularly when as per the specific prohibition contained in section 69 of the Companies Act that such company could not issue the shares at a discount. 21. Therefore, purchase of the shares by the assessee directly from the company in view of bar of discount under section 69 of the Companies Act and the amount was a bonafide transaction relatable to its business. The Assessing Officer has drawn a speculative consideration that the assessee would not adopt Gift Tax appeal No.2 of 1999 and other connected appeals 7 a losing proposition, which no prudent businessman would enter into and that means that non-business considerations were involved. Here, the Assessing Officer appears to have fallen in error, because neither there is any material on record nor specific finding that the assessee has purchased the shares as colourable device to reduce the tax liability. At the most, it may be a measure of commercial expediency and prudency. The assessee could not be prevented from making such investment in certain shares only on the ground that the return from shares was very low. No one can lose sight of the fact that the assessee was not dealing in the shares and investments have been made as incidental activity of commercial expediency/prudency of the business. So, question of element of/deemed gift did not arise at all at the rate of Rs.100/- per share at the relevant time. Not only that, as the value has been fixed by the Government under the Company Law, therefore, proviso to section 4 (1) (a) of the Act is fully attracted in the obtaining circumstances of the case. 22. In the light of the aforesaid reasons, it is held that the value of the transaction/transfer of the shares did not involve the element of gift at the relevant time and is fully covered by the proviso to section 4 (1) (a) of the act. Therefore, the gift tax is not leviable on the indicated transaction of the assessee and the question of law is accordingly answered in favour of the assessee. 23. For the reasons recorded above, the present appeals are dismissed with no order as to costs.