Law:

Section:

Section 45, read with sections 48 and 49, of Income-tax Act, 1961 – Capital gains – Chargeable as – Assessment year 1967-68 – One 'S' had deposited certain amount with 'Z' for purchasing a house in name of his son on attaining majority – 'Z' transferred his bungalow to assessee against said deposit – Assessee contended that said deed executed by 'Z' was really a gift and not a sale, and, therefore, valuation of property had to be computed in accordance with section 49(1)(ii) – Tribunal having found that property was sold for consideration held that transaction could not be considered to be gift inasmuch as it was necessary that a gift must be without monetary consideration – Whether in view of fact that recitals of document demonstrated and proved that an agreement had been arrived at between vendors and vendees before sale deed was executed, Tribunal's finding that said document was a sale, was not erroneous and illegal – Held, yes FACTS One 'S' had deposited a certain amount with one 'Z' with the instructions that a house should be purchased in the name of his son, the assessee, on his attaining majority. After the death of 'S', 'Z' sold his own bungalow by a sale deed, in favour of the assessee against the said deposit. The assessee thereupon sold the bungalow for a higher consideration. The ITO did not accept the transaction as sale. According to him the sale price was much more than what was mentioned in the sale deed and the transaction as disclosed was collusive. After obtaining the valuer's report, he determined the fair market value of the property. In appeal, the AAC reduced the valuation. On second appeal, the assessee contended that the deed executed by 'Z' was really a gift, while, according to revenue, the document was a sale deed and the capital gain earned by the assessee had to be computed in accordance with section 48(iii). The Tribunal held that the transaction was a sale and not a gift. On reference : HELD The word 'sale', as defined in section 54 of the Transfer of Property Act, is a transfer of ownership in exchange for price paid or promised or part-paid or part-promised. The presence of money consideration is, therefore, an essential…

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