Law:

Section:

Section 45, read with section 52 of the Income-tax Act, 1961 - Capital gains-Chargeable as - Assessment year 1970-71 - Value of property fixed in estaty duty proceedings of assessee's father, was more than value for which property was sold and shown by assessee in income-tax return - ITO applied provisions of section 52(2) to arrive at capital gains and assessed capital gains in assessee's hands - Tribunal held that ITO was not justified in invoking provisions of section 52(2) to arrive at capital gains on ground that it had not been shown that there was under statement of consideration - Whether order of Tribunal was justified - Held, yes Section 47 of the Income-tax Act, 1961, read with section 4 of the Gift-tax Act, 1958 - Capital gains - Transactions not regarded as transfer - GTO treated difference between estimated market value of property shown in estaty duty proceedings of assessee's father and consideration set out in sale deed as (deemed) gift and levied gift-tax accordingly - Tribunal held that capital gains determined by ITO was not taxable in assessee's hands in view of section 47(iii) as gift-tax had been levied on assessee - Whether order of Tribunal was justified - Held, no FACTS Certain property in which assessee had 38/72 share was sold for Rs. 5,00,000. The fair market value of the property as on 1-1-1954, was claimed to be Rs. 4,00,000 and the assessee claimed an additional sum of Rs. 10,000 as brokerage. It was on this basis the return was filed. However, the ITO contending that in the estate duty assessment of the assessee's father, the Tribunal had fixed the market value of the same property at Rs. 8,39,000, applied the provisions of section 52(2) and determined the capital gains at Rs. 4,39,000 and accordingly, brought to tax 38/72 shares which came to Rs. 2,26,417 in the assessee's hands. In the gift-tax assessment in regard to the same transaction, the GTO treated the difference between the estimated market value of Rs. 8,39,000 and the consideration set out, i.e., Rs. 5,00,000, in the sale deed as (deemed) gift and he levied gift-tax accordingly. The AAC held that section 52(2) of the Income-tax Act, 1961, was not applicable and he…

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