Smt. Moksh Mahajan, A.M. - (1.) IN an appeal filed by the Revenue, it is contended that the CGT(A) has erred in directing the AO to value the gifted shares on yield method and not on break-up value method. The facts in brief are that the assessee gifted 6,650 equity shares of Tech INvest (INdia) (P). Ltd. of the paid-up value of Rs. 10 each. The shares were not listed on stock exchange. The GTO valued the aforesaid shares at Rs. 41/14 on the basis of break-up method. This was contested by the assessee in the appeal before the CGT(A). The contention was whether shares are to be valued either at par or at Rs. 10/90 per share on yield basis. Various decisions were relied upon in this context. The learned CGT(A) after referring to the provisions of GT Act and the rules made thereon directed the GTO to value the shares in question in accordance with the profit-earning method in the light of the decision of the Honourable Supreme Court in the case of CGT vs. Kusumben D. Mahadevia (1980) 122 ITR 38 (SC) and that of the Gujarat High Court in CGT vs. Executors & Trustees of the Estate of Late Shri Ambalal Sarabhai (1988) 170 ITR 144 (SC). Against this decision, the Revenue has come in appeal.
(2.) The learned Departmental Representative S. K. Srivastava relying heavily on the decision of the Honourable Supreme Court in the case of Bharat Hari Singhania vs. CWT (1994) 207 ITR 1 (SC) submitted that as r. 1D has been held to be mandatory in its application unquoted equity shares have to be valued as per the aforesaid rule. On this decision alone, the order of the CGT needs to be set aside. The learned authorised representative, B. B. Ahuja on the other hand argued that the assessee's case has to be examined under the provisions of GT Act which are not pari materia with those of the WT Act. There are direct decision on the issue namely, CGT vs. Kusumben D. Mahadevia (supra) and that of the Gujarat High Court in the case of Chimanbhai Kasibhai Patel vs. CGT (1993) 203 ITR 57 (Guj), the issue has to be decided in the light of the same. On the other hand, in the case of Bharat Hari Singhania (supra), one of the question before their Lordships of Supreme Court was whether it is obligatory to follow r. 1D while valuing the unquoted equity shares of company other than investment company and managing agency company or is it merely optional ? While deciding the issue, their Lordships of Supreme Court have referred to the case of CGT vs. Executors & Trustees of the Estate of Late Shri Ambalal Sarabhai (supra) and have distinguished the aforesaid decision. This was for the reasons given on p. 21 of the order as reported in (1993) 207 ITR 1 (Guj) (supra). In support of his contention, that r. 1D is not mandatory in valuing unquoted equity shares in gift-tax proceedings, the observations of their Lordships on the various methods of valuation were referred to. It was argued that the application of a particular method for valuation of unquoted equity shares would be dependent on the facts of each case and that too under the provisions of GT Act.
(3.) WE have carefully considered the rival submissions. WE have also gone through the decisions as referred to, on both sides. Both under WT Act as well under GT Act, the value of any asset is to be the price which it would fetch if sold in the open market on the valuation date or on the date on which the gift is made. Rules have also been made in this respect under both the Acts. During the relevant period, s. 7(1) of the WT Act read as under : "7(1). Subject to any rules made in this behalf, the value of any asset, other than cash, for the purpose of this Act, shall be estimated to be the price which in the opinion of the WTO it would fetch if sold in the open market on the valuation date." The working of market value of unquoted equity shares of companies other than investment companies and managing agency companies of WT Rules as they stood at the relevant period of time were provided in r. 1D of WT Rules.;