Law:

Section:

Section 4 of the Gift-tax Act, 1958 - Deemed gift - Assessment year 1960-61 - Assessee who was carrying on business of bus operator transferred certain buses to private limited company - Amount of consideration was credited in his account in company's books of account - Subsequently, certain amount towards shares allotted to assessee was adjusted against amount credited in assessee's name - Income-tax authorities determined fair market value of buses at higher figure - Gift-tax officer thus, took a view that difference between fair market value and actual amount received as consideration for buses amounted to gift - Gift-tax officer levied gift-tax on difference amount - Tribunal held that real value of shares allotted to assessee could not be taken to be their face value but should be taken as 90 per cent of real value of buses transferred, that if so taken, transfer of buses by assessee to company would be for adequate consideration and that assessee was not, therefore, liable to gift-tax - Whether in view of fact that in company's books of account, transactions of transfer of buses and allotment of shares were treated as two independent transactions, it was not necessary to go into question as to what was real value of shares - Held, yes - Whether, therefore, on facts, it could be concluded that transfer of buses by assessee to company was not for adequate consideration under section 4(2), and, consequently, assessee was liable to pay gift-tax - Held, yes FACTS The assessee who was carrying on business as a bus operator transferred certain buses belonging to him to the company, for a total consideration of Rs. 2,58,604 which was the written down value of these buses in the assessee's account. The amount of Rs. 2,58,604 was credited to his account in the company's books and later on Rs. 90,000 out of the said amount was adjusted towards the shares allotted to him and the balance together with the value of the sundry assets sold by him aggregating to Rs. 1,83,133 continued to his credit in the company's accounts. The assessee, his wife and two of his close relatives were the shareholders in the company. The assessee held shares to the value of Rs. 90,000 while…

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