Law:

Section:

Section 52 of the Income-tax Act, 1961 - Capital gains - Understatement of consideration for transfer - Whether provision of section 52(2) applies to cases of understatement of valuation made in sale deed, to wit, where there is in truth a capital gain, but it is concealed by declaring a lower price in deed of transfer with an intention to make unaccounted gains and avoidance or reduction of capital gains tax, and not to cases of transfer for inadequate consideration, whatever be reason, resulting in avoidance of receipt of capital gains itself - Held, yes - Whether where consideration actually recorded in sale deed was also amount actually received by vendor, merely because its fair market value exceeds by 15 per cent of actual sale consideration, it could not be said that it was a case of understatement or that consideration was different from undeclared consideration which was non-existent - Held, yes Section 47, read with section 52 of the Income-tax Act, 1961, read with section 2(xii)/(xxiv) of the Gift-tax Act, 1958 - Capital gains - Transactions not regarded as transfer - Whether word "gift" used in section 47(iii) of 1961 Act, should be given same meaning as is given to that word in 1958 Act, which gives an extended meaning by including a transfer of property for inadequate consideration also within its meaning - Held, yes - Whether therefore, every sale for inadequate consideration would fall within meaning of word "gift" and consequently, it would attract levy of gift-tax and be outside purview of capital gains tax - Held, yes Words and Phrases - Words "value so declared" as occurring in section 45 and word 'gift' as occurring in section 47(iii) of the Income-tax Act, 1961 FACTS The assessee had purchased a plot of land in 1959 for Rs. 3,55,000. In the year 1965-66 the assessee sold the property to three persons. The ITO found that the sale price of two of the items was less than the market value. The ITO noticed that item 1 had been given on perpetual lease to a company on a rental of Rs. 600 per month and subsequently the property was sold for a sum of Rs. 90,000 only. He noticed that the assessee was the managing director of the said company and…

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