Law:

Section:

Once difference between market value of membership card of a stock broker and value at which membership was actually transferred is taxed under provisions of Gift-tax Act taking difference as deemed gift, that amount cannot be taxed again as capital gains under Income-tax Act Section 45 of the Income-tax Act, 1961, read with section 4 of the Gift-tax Act, 1958 - Capital gains - Chargeable as - Assessment year 1994-95 - Whether once difference between market value of membership card of a stock broker and value at which membership was actually transferred is taxed under provisions of 1958 Act taking difference as deemed gift, that amount cannot be taxed again as capital gains under 1961 Act - Held, yes Section 4 of the Gift-tax Act, 1958 - Deemed gift - Assessment year 1994-95 - Whether where a member of stock exchange transferred his membership card at a lower value than its market value, difference is subject to tax as deemed gift under section 4(1)(a) - Held, yes FACTS The assessee, a member of stock exchange, transferred his membership card in 1993 for a consideration of Rs. 6 lakhs which he claimed to be non-taxable. However, the Assessing Officer considering that the assessee obtained the membership in 1987 computed long-term capital gain on the said transfer and also applied the provisions of 1958 Act whereby he estimated market value of the membership card at Rs. 25,25,000 and treated the difference between Rs. 25,25,000 and Rs. 6 lakhs as gift under section 4(1)(a) of the 1958 Act. The Commissioner (Appeals) confirmed the order of the Assessing Officer. The Tribunal reduced the estimated market value of the said membership to Rs. 10 lakhs and directed the Assessing Officer to assess the difference between Rs. 10 lakhs and Rs. 6 lakhs, as deemed gift under section 4(1)(a) and to compute the long-term capital gain on Rs. 10 lakhs. On appeal : HELD In Ravindra Kumar Jain v. CIT [D.B. IT Appeal No. 5 of 2003 dated 23-4-03], it was held that when a card of membership of the stock exchange is transferred against a consideration, that attracts the gift-tax if the consideration received is less than its market value. There was no infirmity in the order of the…

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