Sen, J. - (1.) The following question of law was referred by the Tribunal to the High Court under S. 26(1) of the Gift Tax Act, 1958:"Whether, on the facts and in the circumstances of the case, the balance sheet figures as on 31-3-1972 should be taken for ascertaining the break-up value of the shares gifted and not the balance sheet figures as on 31-3-1973 -
(2.) The assessment year involved is 1973-74. The dispute relates to valuation of unquoted shares of a company which were transferred on 28-3-1973. Section 6 of the Gift Tax Act lays down the method of valuation of gifts. Sub-section (3) provides that where the value of the property cannot be estimated because it is not salable in the open market, the value shall be determined in the prescribed manner. There is no dispute that the shares are unquoted and are not salable in the market. There was a restriction on the sale of shares in the market by the Articles of Association of the Company. Both the department and the assessee agree that the valuation should be made by following the break-up method. The dispute, however, is as to the balance sheet on the basis of which the break-up value will have to be calculated.
(3.) The case of the assessee is that these shares must be valued by referring to the balance sheet figures of the Company as on 31-3-1972 which was the latest available balance sheet on the date of the transfer of shares. There is no question of referring to a balance sheet which was not even in existence on the date of making of the gift. The department has taken the stand that the valuation must be made with reference to the balance sheet figures as on 31-3-1973 which was the closest proximate date from the date of making of the gift. There is no dispute that break-up method of valuation must be followed. If that be so, the only available balance sheet figure as on 28-3-1973 was the latest published balance sheet for the year ended on 31-3-1972.;