- (1.) Heard Mr. D.D. Chopra, learned counsel for the appellants and Mr. P.J. Pardiwala, Senior Advocate appearing for respondent in Income Tax Appeal No.32 of 2006. In other appeals, Mr. Waseequddin Ahmad has adopted the arguments advanced by Mr.P.J. Pardiwala.
(2.) The afore-captioned appeals have been preferred by the Revenue questioning the correctness of the Judgment passed by the Tribunal dated 31st August, 2005, whereby the Tribunal has upheld the validity of the proceedings initiated under Section 16 of the Gift Tax Act, 1958 [hereinafter referred to as the 'Act' for the sake of brevity] but has deleted the charge to gift tax that was levied by the Assessing Officer.
(3.) While entertaining and admitting the appeal on 19.1.2006, the following two questions have been formulated:- (1) Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal erred in law in deciding the addition of Rs.1,33,09,149/- on account of deemed gift within the meaning of the provisions of Section 4 (1) (a) of the Gift Tax Act by holding that the transfer of property was made for adequate consideration, while the price paid by the respondent for acquiring the shares of the closely held companies of the Sahara Group was much more than the value of these shares as worked out in the manner laid down in Schedule II of the Gift Tax Act. (2) Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was justified in law in holding that the transfer of property was made for adequate consideration within the meaning of the provisions of Section 4 (1) (a) of the Gift Tax Act as according to the provisions of Section 79 (1) of Indian Companies Act, the company whose shares were acquired by the respondent had no power to sell the shares at less than the face value, without appreciating that the transactions between the respondent and the closely held companies of the Sahara Group were collusive transactions in which shares of the said companies were acquired by the respondent by paying much more than the value of the shares as determined in the manner laid down in Schedule II of the Gift Tax Act and the funds for purchase of said shares were also provided to the respondent from the cash rich companies of the same group.;