Law:

Section:

2007] 293 ITR 321 [2007] 161 TAXMAN 64 (KAR.) HIGH COURT OF KARNATAKA BPL Ltd.* v. Deputy Commissioner of Gift-tax, Central Circle-II R. GURURAJAN AND JAWAD RAHIM, JJ. GIFT-TAX APPEAL NO. 1 OF 2005 DECEMBER 15, 2006 I. Section 16 of the Gift-tax Act, 1958 - Gift escaping assessment - Assessment year 1993-94 - Whether change of opinion would be a change in findings given after considering material on record - Held, yes - Whether mere correspondence or mere query and an answer to that does not by itself mean that there is a change of opinion - Held, yes - Assessee-company transferred its holdings in certain companies to a concern 'C' for a total consideration which was equal to cost of acquisition of those shares for assessee - During income-tax proceedings there was an audit objection that shares transferred by assessee was for inadequate consideration and there was some correspondence between assessee and department - However, assessee satisfied department that there was no element of gift, and accordingly, Assessing Officer did not proceed with any gift tax proceedings - Subsequently, pursuant to search in assessee's premise Assessing Officer issued notice under section 16 and rejecting assessee's submission concluded that amount by which value of shares exceeded value of consideration would be deemed to be a gift made by assessee in terms of section 4(1)(a) and levied gift-tax - Assessee's case was that reopening under section 16 was without jurisdiction as it was only on basis of change of opinion - It was found that though there was some correspondence between parties in matter of alleged gift during income-tax proceedings, same did not end in any finality on issue in question; Assessing Officer only in light of search proceedings bona fidely believed that there was deemed gift under section 4(1)(a) and reopened assessment - Whether, on facts, assessee's case was to be accepted - Held, no II. Section 4 of the Gift-tax Act, 1958 - Deemed gift - Assessment year 1993-94 - Assessee-company transferred certain shares for a lesser consideration to its sister concerns 'C' and 'A' which were its subsidiary companies - Assessee filed return declaring nil gift…

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