Law: Gift Tax Act, 1958

Section: 3,46

JUDGMENT Divan, CJ.-In this reference at the instance of the revenue the following two questions have been referred to us for our opinion: "(1)Whether, on the facts and in the circumstances of the case, the finding of the Tribunal based on the ratio of the case decided by the House of Lords in Lynall v. Inland Revenue Commissioners [1972] 83 ITR 563 (HL) and basing the valuation of the shares of Bakubhai and Ambalal Ltd., London, in its balance-sheet as at March 31, 1963, instead of March 31, 1964, is bad in law? (2)Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in accepting the valuation of the shares as returned by the assessee and deleting Rs. 27,360 added by the Gift-tax Officer under section 15(3) of the Act?" The Tribunal has also referred the following question to us at the instance of the assessee, namely: "Whether, on the facts and in the circumstances of the case, the learned Tribunal erred in holding that the valuation of shares in question should not be made on ex-right basis in respect of the right shares issued by the company?" We may mention at this stage that Mr. K.C. Patel, appearing on behalf of the assessee, has not pressed the question which has been referred to us at the instance of the assessee and, therefore, in the course of this judgment we will only deal with the questions referred to us at the instance of the revenue. The relevant assessment year is 1965-66. The assessee was originally Ambalal Sarabhai and, after his death, the executors and trustees of his estate have been brought on the record of these proceedings. Late Ambalal Sarabhai held 480 shares in an English company called Messrs. Bakubhai & Ambalal Ltd., London. The share capital of the company consisted of 2,000 shares of £10 each. This company was, what is known under the Indian Companies Act, as a private limited company, that is, the articles of association of this company contained restrictive provisions as to the alienation of shares, the alienation being permitted amongst existing shareholders. Thus, this company if incorporated in India would be known as a private limited company. At its extraordinary general meeting…

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