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Section 6 of the Gift-tax Act, 1958 - Valuation of gifts - Whether where assessee had gifted 20 per cent of her interest in partnership in favour of her daughters-in-law, Tribunal was not justified in reducing purchase value of gift from 20 per cent to 10 per cent - Held, yes FACTS The assessee had gifted 20 per cent of her interest in the partnership in favour of her daughters-in-law. The assessing authority determined the five year purchase value by taking into account said 20 per cent interest. The AAC although sustained the computation of the purchase value, but he reduced the value of the taxable gift from 20 per cent to 10 per cent of the 5 year purchase value. On cross appeals, the Tribunal directed recomputation and also directed that the value of the right forgone be taken at 10 per cent of three year's purchase value recomputed. On reference: HELD It was the common case of the parties that the assessee had gifted 20 per cent of her right in the partnership in favour of her daughter-in-law. If that be the position, there was no reason why the Tribunal reduced that to 10 percent.The direction to reduce the purchases value of the gift from 20 percent to 10 percent under the circumstances, was erroneous. Note: The decision is in favour of the revenue. P.K.R. Menon and N.R.K. Nair for the Applicant. K.M. Sivasankaran and V.V. Asokan for the Respondent. JUDGMENT K.P. Radhakrishna Menon, J.- The question referred for our opinion reads: "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in directing that the value of gift forgone be taken at 10% value of three years' purchase value?" That the assessee had gifted 20% of her interest in the partnership in favour of her daughters-in-law is beyond dispute. The purchase value of the above 20 %, therefore, is required to be calculated. The assessing authority determined the five-year purchase value at Rs. 2,44,602. According to it, 20% of the said purchase value which represents the value of the right forgone by the assessee comes to Rs. 48,920. The Appellate Assistant Commissioner before whom the assessee had filed an appeal, although sustained the computation of the…

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