Law:

Section:

Section 52 of the Income-tax Act, 1961 - Capital gains - Understatement of consideration for transfer - Whether even if market value of capital asset on date of its transfer is 15 per cent more than value declared by assessee, without establishing that consideration actually received or accrued to assessee is more than what is declared, revenue cannot invoke section 52(2) - Held, yes - Whether once it is established by revenue that on sale of capital asset assessee, apart from cash consideration declared in return, has received other consideration, then it is not necessary for revenue to establish as to how much additional consideration was actually received by assessee - Held, yes - Whether where revenue had established that fair market value of shares sold by assessee was more than Rs. 20 per share as against full value of Re. 1 declared by assessee and revenue had also established that apart from declared value of Re. 1, assessee had received additional consideration, valuation of shares under section 52(2) was justified - Held, yes FACTS The assessee was an individual belonging to the 'P' group, which consisted of 6 family members including the assessee. 'P' group had controlling interest in the 'P' Ltd. as they were holding certain shares of the company. By an agreement, head of the 'P' group transferred the controlling interest of the 'P' group in 'P' Ltd. by selling the entire shares held by them in 'P' Ltd. to other company for a consideration of Re. 1 per shareholder. Thus, by the said transaction shares of face value of Rs. 10 each were sold for total consideration of Rs. 6. Accordingly, the assessee received cash consideration of Re. 1, on sale of shares held by him in 'P' Ltd. and declared the same in the return of income. On perusal of the sale agreement, the Assessing Officer noticed that in addition to Re. 1 per shareholder several benefits were received by 'P' group as sale consideration and, therefore, he invoked section 52(2) and adopted the market value at Rs. 22.50 per share as sale price of the shares and assessed the long-term capital gains income of the assessee accordingly. On appeal, the Commissioner (Appeals) upheld the assessment. On…

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