Sabyasachi Mukharji, J. - (1.) This is a reference under Section 27(1) of the W.T. Act, 1957. The following question has been referred to us : "Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the shares valued at Rs. 6,89,714 should be excluded from the net wealth of the assessee for the assessment year 1958-59?" The assessment year is 1958-59, for which the valuation date is 12th October, 1958. The assessee gifted shares valued at Rs. 6,89,714 to Shri Mahesh Kumar Jatia, grandson of the assessee. The gift was made on 10th November, 1956, and a trust deed was executed on 8th July, 1957. The transfer of the shares has been registered in the name of Mahesh Kumar Jatia in 1958 which falls after the valuation date. It is significant, therefore, to note that both 10th November, 1956, and 8th July, 1957, fall before the valuation date. In the register of members of the company the change of shareholding occurred after the valuation date in 1957. The relevant valuation date is 12th October, 1957. There is a mistake in the order of the Tribunal in the statement of the case in para. 3 but the correct date appears from the order of the Tribunal. The registration in the name of Mahesh Kumar Jatia took place after the valuation date and both the execution of the trust deed, which was done on 8th July, 1957, as well as the making of the gift, which was done on 10th November, 1956, were prior to the valuation date. The WTO was of the view that the assessee was the owner of the shares during the relevant year as the shares were transferred in the name of Mahesh Kumar Jatia only in 1958. Thus, he included the value of those shares amounting to Rs. 6,89,714 in the total wealth of the assessee.
(2.) Being aggrieved by the order of the WTO the assessee went up in an appeal before the AAC. It was urged before him that the value of the shares amounting to Rs. 6,89,714 should not have been included in the wealth of the assessee as the same was gifted to Mahesh Kumar Jatia. The AAC was of the View that the gift was made on 10th November, 1956, and a trust deed was executed on 8th July, 1957. Since the delivery of the shares was made over to the trustees nothing more remained to be done by the assessee for effectuating the transfer of the shares and thus he excluded the value of the shares amounting to Rs. 6,89,714 from the net wealth of the assessee.
(3.) Being aggrieved by the AAC's order the Revenue went up in appeal before the Tribunal. It was contended before the Tribunal that unless there was registration of the transfer the legal ownership would still be with the assessee and as the transfer of the shares had been registered in the name of Mahesh Kumar Jatia only in 1958, the assessee was the owner of the shares till then and the value of the shares should be included in the net wealth of the assessee. The Tribunal after referring to the share certificates and the facts of the case observed that the declaration of gifts in respect of these shares was made on 10th November, 1956, and the trust deed was executed on 8th July, 1957. Though the transfer of the shares was registered in 1958, the value of these shares could not be included in the wealth of the assessee. On these facts the question of law has been referred to this court.;