1. By this application, learned counsel for the applicant submits that by mistake he referred to the provision of Section 260A of the Income-tax Act, 1961, but the relevant provision is Section 27A of the Wealth-tax Act, 1957, under which the appeal, in case of gift-tax, is maintainable.
2. Considering his submissions, the amendment application is allowed. Amended cause title has already been filed. That be taken on record.
3. Heard learned counsel for the appellant for admission of appeal also.
4. This appeal is moved under Section 27A of the Wealth-tax Act. The following questions are raised for our consideration :
"1. Whether, on the facts and in the circumstances of the case, the transfer/nomination of membership of the Jaipur Stock Exchange Ltd., from the appellant to Shri Pawan Kumar Jain amounts to gift and is liable for tax under the provisions of Section 4(1)(a) of the Gift-tax Act, 1958 ?
2. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in assessing the value of said transfer of membership of the JSEL on July 21, 1989, at Rs. 4,50,000, treating the said transfer only on November 11, 1991, and on the basis of auction value in other cases for the purpose of charging of gift-tax under Section 4(1)(a) of the Gift-tax Act, 1958 ?
3. Whether, on the facts and in the circumstances of the case, the Tribunal is correct in law in sustaining an addition of Rs. 4,50,000 by adopting the value of the said transfer of membership of the stock exchange on July 21, 1989, from the appellant to Shri Pawan Kumar Jain irrespective of the fact that such consideration was deleted by the appellate authority by the income-tax proceeding and held not liable to capital gain tax ?
4. Whetter on the facts and in the circumstances of the case, the membership of the stock exchange can be treated as personal property of a member and transfer of such membership would fall under the provision of the Gift-tax Act, 1958, and is liable to tax and as deemed gift ?
5. Whether, the Tribunal has rightly interpreted the bye-laws of the Jaipur Stock Exchange Ltd., in holding the transfer of membership of stock exchange is liable to gift-tax and sustaining the addition of Rs. 4,50,000 made by the Assessing Officer ?
6. Whether, on the facts and in the circumstances of the case, the issuance of notice under Section 16(1) of the Gift-tax Act, 1958, and initiation of proceedings against the appellant is valid in law ?"
5. The basic issue involved in these questions where there is a case of deemed gift.
6. The admitted facts are that the Jaipur Stock Exchange was incorporated as a company limited by guarantee on December 28, 1983. The appellant was admitted as a member of JSEL on March 11, 1986, on payment of admission fee of Rs. 2,500. On August 21, 1989, the appellant entered into an agreement with Pawan Kumar that he will transfer the membership to him when it is transferable, as minimum five years are required, within which he cannot transfer the membership.
7. The membership was finally transferred on December 24, 1991, at Rs. 50,000. The Gift-tax Officer during the course of assessment noticed that one of the memberships of the stock exchange was auctioned in 1991 at Rs. 8,71,000, therefore, he has taken the market value of the membership at Rs. 8,71,000 as on November 11, 1991, and taxed the difference of the amount at which it was transferred and the market value, as deemed gift under Section 4(1) of the Gift-tax Act, 1958.
8. In appeal before the Tribunal, the Tribunal has reduced the market value of the membership to Rs. 4,50,000 and modified the order of the Gift-tax Officer to that extent.
9. Learned counsel for the appellant, Mr. Jain, submits that the membership is not a property, therefore, there is no question of charging any gift-tax on transfer of the membership of the stock exchange by the appellant. He placed reliance on the decision of their Lordships in the case of Ahmedabad Stock Exchange v. Assistant Commissioner Of Income Tax, Ahmedabad. [2001] 248 ITR 209 (SC).
10. The property has been defined in Clause (xxii) of Section 2 of the Gift-tax Act, 1958. As per the definition, the "property" includes any interest in property, movable or immovable. Clause (a) of Sub-section (1) of Section 4 provides for deemed gift. As per Clause (a) of Sub-section (1) of Section 4, the amount by which the market value of the property at the rate of the transfer exceeds the value of the consideration shall be deemed to be a gift by the transferor.
11. It is true that their Lordships have considered whether the membership of the stock exchange can be attached as in case of other properties and whether it is a property. Their Lordships have taken the view that the right of nomination finally vests in the stock exchange and without nomination by the stock exchange, the membership cannot be transferred, therefore, that membership cannot be attached like any other property.
12. But, in the case in hand, there is no dispute that there was a transfer of the membership. There is a transfer of the membership by the appellant and his membership has been transferred at the consideration of Rs. 50,000. When a valuable right or any interest in the property, which has some value in terms of money, if that right has been transferred for the consideration less than its market value, that attracts the provisions of Clause (a) of Sub-section (1) of Section 4 of the Gift-tax Act. So far as the market value is concerned, learned counsel for the appellant has not disputed the market value of the membership, which has been finally taken by the Tribunal.
13. Considering the law involved in this case and on the facts, the view taken by their Lordships in this case has no application.
14. Considering these admitted facts, no case is made out for admission of the appeal.
15. The appeal stands dismissed at admission stage.
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