Law:

Section:

Section 52, read with section 48, of the Income-tax Act, 1961 - Capital gains - Understatement of consideration for transfer - Assessment year 1969-70 - Assessee-company sold its two non-residential buildings for Rs. 80,000 - ITO during course of assessment found that fair market value of building sold was Rs. 1,20,000 which was much higher than value stated as consideration in deed of transfer and, therefore, he included difference between sum of Rs. 1,20,000 and Rs. 80,000 mentioned in sale deed in income of assessee - Whether all that section 52(2) requires for its application is that there must be difference between fair market value of capital asset transferred by an assessee as on date of transfer and full value of consideration declared by assessee in respect of transfer of such capital asset which is more than 15 per cent of consideration declared by assessee - Held, yes - Whether since in instant case, difference between fair market value of buildings transferred by assessee and consideration declared by assessee in sale deed as value of those buildings was in excess of 15 per cent of letter sum, section 52(2) was attracted and difference between Rs. 1,20,000 and Rs. 80,000, namely Rs. 40,000 was to be treated as "capital gains" for purpose of determining income of assessee and should be computed as such under section 48 - Held, yes FACTS The assessee-company sold two buildings owned by it to one of its shareholders for Rs. 80,000. The ITO found that the fair market value of the buildings sold by the assessee was much higher than the value stated as consideration in the deed of transfer. The full market value, he found, was Rs. 1,20,000. He also found that the under-statement of the value of the sale deed was with the object of reduction of the liability of the assessee for income-tax under section 45. He accordingly, included the difference between the sum of Rs. 1,20,000 and Rs. 80,000 mentioned in the sale deed in the income of assessee. On appeal, the AAC held that in absence of any proof that the assessee had received by way of consideration anything more than what had been stated to have been received in the sale deed section 52 could not be…

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