Case: Commissioner of Gift Tax, West Bengal Vs. Sardar Ajaib Singh

HEGDE, J.1. This appeal by special leave arises from the decision of the High Court of Calcutta in Gift-tax Matter No. 286 of 1963 on its file. It relates to the gift-tax assessment for 1958-59. In that case several questions were referred to the High Court by the Income-tax Appellate Tribunal, A Bench, Calcutta. But at present we are only concerned with question No. 1(a) which reads " Whether, on the facts and in the circumstances of the case, in determining the break up value of the shares of M/s. Indra Singh and Sons Pvt. Ltd. as on 31st March, 1958, the Tribunal was justified in not allowing any deduction for the following amounts :(a) estimated tax liability amounting to Rs. 9, 50, 000 which was not provided for in the balance-sheet ? "2. It appears that counsel for the parties conceded before the High Court that that question was covered by the decision of this court in Kesoram Industries & Cotton Mills Ltd. v. Commissioner of Wealth-tax. On the basis of that concession, the High Court answered that question in favour of the assessee.3. Before us, it was urged on behalf of the revenue that the concession made before the High Court was an erroneous one and the decision of this court in Kesoram Industries case does not bear on the issue arising for decision.The assessee who is an individual made a gift of 350 ordinary shares of the face value of Rs. 1, 000 each in M/s. Indra Singh and Sons Pvt. Ltd. on December 13, 1957, to his daughter, Smt. Rupinder Kaur. As the assessee was not able to produce any quotation in respect of the market value of the shares of that company, the Gift-tax Officer for the purpose of gift-tax assessment valued those shares at Rs. 4, 282 per share on the basis of the valuation adopted by the Wealth-tax Officer for the assessment year 1957-58, being the break up value computed on the basis of assets and liabilities of the company as disclosed by the balance-sheet as on March 31, 1957. In computing the net value of the assets of the company, the assessee wanted the Gift-tax Officer to make certain deductions ; one such deduction asked for by him was the estimated tax liability of Rs. 9, 50, 000. The Gift-tax Officer refused to make that deduction, as the same was not provided for in the balance-sheet. The Appellate Assistant Commissioner confirmed the decision of the Gift-tax Officer. On a further appeal, the Tribunal came to the conclusion that that tax liability was required to be taken into account in computing the value of the assets of the company. But that liability was covered by the existing reserve, advance tax paid and refund to which the company was entitled under section 18(5) of the Income-tax Act. This finding of the Tribunal is essentially a finding of fact, and it is not shown that that finding is in any manner vitiated. That being so, the ratio of the decision of this court in Kesoram Industries case is not attracted.4. This question we have discussed in greater detail in the assessees wealth-tax appeals (Civil Appeals Nos. 2485 and 2486 of 1966) in which we have delivered judgment just now

Decision reasoning: 1[ds]This finding of the Tribunal is essentially a finding of fact, and it is not shown that that finding is in any manner vitiated. That being so, the ratio of the decision of this court in Kesoram Industries case is not attracted.This question we have discussed in greater detail in the assesseesappeals (Civil Appeals Nos. 2485 and 2486 of 1966) in which we have delivered judgment just now