COMMISSIONER OF GIFT TAX Vs. PREMA SRINIVASAN

JUDGEMENT

(1.) THE question of law referred to us for our consideration at the instance of the Revenue relating to the assessee's assessment year 1975-76 reads as under :

(2.) THE assessee is an individual who made a gift of 2,000 shares of Sundaram Industries Limited on March 26, 1975. She valued the shares gifted by her on the basis of the law which prevailed at the time of making the gifts. THE Gift-tax Officer accepted the assessee's method of valuation except for adding back the gratuity provision made by the company for purposes of arriving at the value of the shares of the company. THE assessee appealed against the valuation determined by the Gift-tax Officer and the assessee's case was accepted. Subsequently, the Gift-tax Officer reopened the original assessment on the ground that the valuation therein was not done in accordance with Rule 10(2) of the Gift-tax Rules and revalued the value of the shares at Rs. 343.85 as against the value returned by the assessee at Rs. 134.92, in the original return submitted by her. THE assessee challenged the orders of reassessment. THE Commissioner of Income-tax as well as the Tribunal came to the conclusion that the reopening of assessment under Section 16(1)(b) of the Gift-tax Act was not warranted and that there was no escapement of gift-tax on the part of the assessee. THE Tribunal after following its earlier decision in the case of Nalini Srinivasan, held that there was no escapement of gift. THE earlier order of the Appellate Tribunal in the case of Nalini Srinivasan in G. T. A. Nos. 56 to 58 of 1979 dated August 26, 1980, was the subject-matter of consideration before this court in T. C. Nos. 1215 to 1217 of 1984 dated November 5, 1997 (CGT v. Nalini Srinivasan [1999] 238 ITR 592), and this court therein held that where shares have been valued on the basis of a recognised method of valuation, it would not be proper to reopen the concluded assessment made earlier to revalue the shares on the basis of another, method of valuation which may yield higher value and it was held that as between two recognised methods of valuation if one recognised method of valuation was adopted to value the shares, then it cannot be said that there was escapement in such a contingency in the gift-tax proceedings.