Section 7. Gift-tax authorities and their jurisdiction

CHAPTER III GIFT-TAX AUTHORITIES 1[ 7. Gift-tax authorities and their jurisdiction. —The income-tax authorities specified in section 116 of the Income-tax Act shall be the gift-tax authorities for the purposes of this Act and every such authority shall exercise the powers and perform the functions of a gift-tax authority under this Act in respect of any person within his jurisdiction, and for this purpose his jurisdiction under this Act shall be the same as he has under the Income-tax Act by virtue of orders or directions issued under section 120 of that Act (including orders or directions assigning concurrent jurisdiction) or under any other provision of that Act. Explanation. —For the purposes of this section, the gift-tax authority having jurisdiction in relation to a person who has no income assessable to income-tax under the Income-tax Act shall be the gift-tax authority having jurisdiction in respect of the area in which that person resides. 7A. [Powers of Commissioner respecting specified areas, cases, persons, etc.] — Omitted by the Direct Tax Laws (Amendment) Act, 1988 (4 of 1988), s. 165 ( w.e.f. 1-4-1988) . 7AA. [ Concurrent jurisdiction of Inspecting Assistant Commissioner and Gift-tax Officer. ] — Omitted by s. 165, ibid . ( w.e.f. 1-4-1988) . 7B. [ Power to transfer cases. ]— Omitted by s. 165, ibid. ( w.e.f. 1-4-1988) . 7. Unquoted equity shares in interlocked companies. — (1) The value of an unquoted equity share in one of the two interlocked companies held by the other interlocked company for the purposes of rule 6 shall be equal to the paid-up value of such share or the value determined under sub-rule (2), whichever is higher. (2) For the purpose of sub-rule (1), the aggregate value of all the equity shares in an interlocked company shall be arrived at by multiplying the maintainable profits of such company by— (a) the fraction 100/8.5, in a case where the gross total income of the company consists, to the extent of not less than 51 per cent. of income chargeable under the head "Income from house property" under the Income-tax Act ; or (b) the fraction 100/10, in the case of any other interlocked company, and the resultant amount divided by the number of such equity shares shall be the value of such an equity share in such company. (3) The maintainable profits of the company, for the purpose of sub-rule (2), shall be computed in the following manner, namely :— (a) the book profits of the company for the five accounting years of the company immediately preceding the date on which the gift was made shall first be ascertained ; (b) adjustments shall be made to the book profits for each of the said five years for all nonrecurring and extraordinary items of income and expenditure and losses ; (c) adjustments shall be made to the book profits for expenditure which is not of a revenue nature but is debited in the accounts and for receipts which are in the nature of revenue receipts but are not accounted for in the profit and loss account ; (d) any development rebate or investment allowance debited in the books of account shall be added back to the book profits ; (e) the tax liability of the company on the book profits, arrived at after the adjustments at items (a), (b), (c) and (d), shall be deducted from such book profits ; (f) amounts required for paying dividends on preference share or shares with prior rights shall be deducted from such book profits; (g) the aggregate of the book profits for the five accounting years so arrived at, divided by 5, shall be the maintainable profits of the company. Explanation. —For the purposes of this rule, "interlocked companies" means any two investment companies each of which holds shares in the other company.] ______