INCOME TAX

Clarification in respect of valuation of gifts of shares/debentures on or after 1-4-1992 under the Gift-tax Act, 1958, in view of the omission of Part C of Schedule III to the Wealth-tax Act, 1957

Circular No. 635

Dated 20/8/1992

Under the Gift-tax Act, 1958, the value of any property, other than cash, transferred by way of gift, shall be its value as determined in the manner laid down in Schedule II to the Gift-tax Act, where it had been stated that the value shall be determined in accordance with the provisions of Schedule III to the Wealth-tax Act with certain modifications.

2. Part C of Schedule III to the Wealth-tax Act, 1957, contains rules for determining value of shares in or debentures of companies. However, the above Part C of Schedule III is omitted by the Finance Act, 1992, with effect from 1-4-1993.

3. This omission of Part C of Schedule III to the Wealth-tax Act has created some doubts about the determination of the value of shares in or debentures of companies under the Gift-tax Act.

4. The matter has been considered. It is clarified that omission of Part C of Schedule III to the Wealth-tax Act does not affect the determination of value of shares in or debentures of companies under the Gift-tax Act. For this limited purpose, this Part C of Schedule III to the Wealth- tax Act can be taken to be on the statute even after 1-4-1993. For the purpose of the Gift-tax Act, the value of shares in or debentures of companies shall continue to be determined as per rules in Part C of Schedule III to the Wealth-tax Act.

(Sd.) Hemant Sarangi,

Under Secretary (OT),

Central Board of Direct Taxes.