ISMAIL J. - The Income-tax Appellate Tribunal, Madras Bench, at the instance of the Commissioner of Gift-tax (Central), Madras, under section 26(1) of the Gift-tax Act, has referred the following questions of law for the opinion of this court :
'(1) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in determining the value of 4,690 shares in the Indian Express Newspapers (Bombay) Ltd., at Rs. 5,92,112 as against Rs. 6,48,520 declared by the assessee herself in her return ?
(2) Whether the Appellate Tribunal acted within the scope of its appellate powers in granting the relief in excess of the relief prayed for by the assessee in the appeal ?'
The assessee, late Smt. Moonghibai Goenka, owned 4,700 equity shares in the Indian Express Newspapers (Bombay) Ltd., Bombay. By deeds of settlement dated May 7, 1966, she transferred 4,690 shares to four different trusts created by her for the benefit of her three minor grand-children. For the assessment year 1967-68, the relevant accounting period ending on March 31, 1967, a return of taxable gifts at the value of Rs. 6,48,520 was filed by Sri Bhagwandas Goenka, as the legal representative of the late Smt. Moonghibai Goenka. The Gift-tax Officer did not accept the valuation return and determined the value of the shares in question at Rs. 8,64,695. On appeal, the Appellate Assistant Commissioner confirmed the Gift-tax Officers valuation and the assessment made by him. The assessee filed a further appeal to the Income-tax Appellate Tribunal. The Tribunal by its order dated August 4, 1969, observed as follows :
'We are of the view that the question of the disputed valuation should be referred to the arbitration of two valuers one of whom should be nominated by the assessee and the other by the Gift-tax Officer. We, accordingly, direct both the parties to nominate their respective valuers within fifteen days from the receipt of this order.'
Such arbitrators were appointed and they by their report dated May 14, 1970, decided the valuation of the 4,690 equity shares gifted in this case at Rs. 5,92,112. By its order dated July 18, 1970, the Tribunal held :
'The valuation report has been received. Conformably to the report of the valuers, we direct that the value of the shares may be taken at the Rs. 5,92,112. In the circumstances of this case, the assessee will be entitled to the full cost of the valuation. The appeal is allowed.'
It is the correctness of this order of the Tribunal that is challenged in the form of the questions extracted above.
The learned counsel for the revenue contended that the assessee all along having contended that value of the shares in question was Rs. 6,48,520, it is not open to the Tribunal to fix the value at a lesser figure, namely, at Rs. 5,92,112, and even according to the provisions of section 23(6) of the Gift-tax Act, as it then stood, the order of the Tribunal should be in accordance with the claim of the assessee before it.
In this case, admittedly, the assessee had throughout contended that the value returned by the assessee at Rs. 6,48,520 was the correct value of 4,690 equity shares, and even in the grounds of appeal before the Tribunal, the assessee had prayed that the Tribunal may be pleased to take the valuation of the 4,690 shares to be only at Rs. 6,48,520. It is in view of this only that the learned counsel for the revenue contends that the Tribunal has no jurisdiction to go beyond the claim made by the assessee in the appeal, and even then section 23(6) of the Act requires the Tribunal to pass its order conformably to the decision of the valuers, the Tribunal ought not to have fixed the value of the shares at Rs. 5,92,112 since the assessee had prayed that the same should be fixed at Rs. 6,48,520.
The learned counsel for the assessee apart from contesting the validity of the claim on the part of the department, took a preliminary objection, namely, that the questions of law referred to his court by the Tribunal did not arise out of the order of the Tribunal and, therefore, this court should decline to answer the questions referred to it. According to the learned counsel, the point now raised before this court was not raised before the Tribunal and, therefore, the Tribunal did not decide the point raised by the revenue, and, consequently, the question now raised could not be said to arise out of the Tribunal within the scope of section 26(1) of the Gift-tax Act. In support of this contention, the learned counsel placed reliance on the decision of the Supreme Court in Commissioner of Income-tax v. Scindia Steam Navigation Co. Ltd. : 42ITR589(SC) reaffirmed by the Supreme Court by a subsequent decision in Keshav Mills Co. Ltd. v. Commissioner of Income-tax : 56ITR365(SC) followed by a Full Bench of the Kerala High Court with reference to a reference made under section 26(1) of the Gift-tax Act, 1958, in Commissioner of Gift-tax v. Dr. V. Madhavan Valiathan : 68ITR729(Ker) . Considering the scope of the expression 'any question of law arising out of such order' appearing in section 66(1) of the Indian Income-tax Act, 1922, the Supreme Court in Commissioner of Income-tax v. Scindia Steam Navigation co. Ltd. : 42ITR589(SC) observed as follows :
'The result of the above discussion may thus be summed up :
(1) When a question is raised before the Tribunal and is dealt with by it, it is clearly one arising out of its order.
(2) When a question of law is raised before the Tribunal, but the Tribunal fails to deal with it, it must be deemed to have been dealt with by it, and is, therefore, one arising out of its order.
(3) When a question is not raised before the Tribunal, but the Tribunal deals with it, that will also be a question arising out of its order.
(4) When a question of law is neither raised before the Tribunal nor considered by it, it will not be a question arising out of its order notwithstanding that it may arise on the findings given by it.'
It is not in dispute that the language of section 26(1) of the Gift-tax Act, 1958, under which the present reference has been made is similar to to the language of section 66(1) of the Indian Income-tax Act, 1922, and section 256(1) of the Income-tax Act, 1961, and, therefore, the decision of the Supreme Court referred to above will clearly apply to the present reference and, as a matter of fact, as we pointed out already, the Kerala High Court followed the decision of the Supreme Court referred to above in regard to a reference made under section 26(1) of the Gift-tax Act. We have extracted the order of the Tribunal in full. There is no indication in the order that the revenue raised any such question as has been referred to us by the Tribunal, and, therefore, the Tribunal had no occasion to consider any such question. It is not the case of the revenue that such a question was raised before the Tribunal but the Tribunal omitted to consider the question and give a decision thereon. Under these circumstances, the present case falls squarely within the fourth category enumerated by the Supreme Court in its decision in Commissioner of Income-tax v. Scindia Steam Navigation Co. Ltd. : 42ITR589(SC) referred to above and, therefore, the reference itself is incompetent. In view of this, we decline to answer the questions referred by the Tribunal to this court in the present case. There will be no order as to costs.