NDLI: Deputy Commissioner of Gift Tax, Central Circle-ii Vs. M/s Bpl Limited

Content Provider	Supreme Court of India
e-ISSN	30484839
Language	English
Access Restriction	NDLI
Subject Keyword	Gift Tax Act 1958
Content Type	Text
Resource Type	Law Judgement
Jurisdiction	India
Case(s) Referred	Referred Case 0 Referred Case 1
Case Type	Appeal
Court	Supreme Court of India
Disposal Nature	Appeal Dismissed
Headnote	Gift Tax Act, 1958 – ss. 4, 6 and Schedule II – Wealth Tax Act,1957 – Schedule III, Part A r.2(9) & r.2(11); Part C, rr. 9 & 11; and Part H, r. 21 – “Quoted” shares and “unquoted” shares – Equity shares in lock-in-period – Valuation of – Respondent-assessee gifted 29,46,500 shares of M/s. BPL Sanyo Technologies Limited and 69,49,900 shares of M/s. BPL Sanyo Utilities and Appliances Limited to M/s. Celestial Finance Limited –Shares of M/s. BPL Sanyo Technologies Limited and M/s. BPL Sanyo Utilities and Appliances Limited, both public limited companies, were listed and quoted on the stock exchanges – However, these gifted shares being promoter quota shares were under a lock-in period up to 16th November 1993 and 25th May 1994 respectively – In the impugned judgment, the High Court observed that the equity shares under the lock-in period were not ‘quoted shares’ – A general circular issued by SEBI however stated that shares under the lock-in period can be transferred inter se the promoters – Issue whether such restricted transfer would convert the equity shares in the lock-in-period into ‘quoted shares’ as defined vide sub-rule (9) to r. 2 of Part A of Schedule III of the W.T. Act – Answering in negative, the Court held: The restricted transfer would not make the equity shares in the lock-in period into “quoted shares” as the lock-in shares are not quoted in any recognised stock exchange with regularity from time to time and it is not possible to have quotations based upon current transactions made in the ordinary course of business – The shares in question being “unquoted shares” have to be valued in terms of r. 11 of Part C of Schedule III of the W.T. Act as a standalone valuation method – This would be in accord with sub-section (1) to s. 6 of the G.T. Act, which states that the value of a property, other than cash, transferred by way of gift, shall be valued on the date on which the gift was made and shall be determined in the manner as laid down in Schedule II of the G.T. Act, which makes the provisions of Schedule III of the W.T. Act applicable – Valuation cannot ignore the limitations attached to the shares – r. 21 of Part H of Schedule III of the W.T. Act permits valuation and ascertainment of the market value as per provisions of Schedule III of the W.T. Act, but does not state that valuation will be done by disregarding the restrictions, or by enhancing the rights which have been transferred, or by revaluation of the asset when provisions of Schedule III are invoked for purpose of valuation of an asset under the W.T. Act.Shares and Securities – Wealth Tax Act, 1957 – Explanation to r. 2(9) of Part A, Schedule III – Effect of – Held: Explanation to r. 2(9) of Part A, Schedule III of the W.T. Act does not prohibit the authority, tribunal or the court from examining whether a particular share, be it equity or preference share, is a “quoted share” or an “unquoted share” in terms of sub-rules (9) and (11) of r. 2 of Part A of Schedule III of the W.T. Act – This right which is conferred on the authorities under the W.T. Act or the G.T. Act is not delegated to the stock exchange – A decision of the authority is however amenable and can be examined when challenged in an appeal – Gift Tax Act, 1958.
Judge	Hon'ble Mr. Justice Sanjiv Khanna
Neutral Citation	2022 INSC 1077
Petitioner	Deputy Commissioner Of Gift Tax, Central Circle-ii
Respondent	M/s Bpl Limited
SCR	[2022] 14 S.C.R. 938
Judgement Date	2022-10-13
Case Number	3265

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