Deemed gift under Gift-tax law requires proof of inadequate actual consideration, not just a higher valuation estimate.

Section 4(1)(a) of the Gift-tax Act applies only where immovable property is transferred for consideration that is actually inadequate, and the revenue must prove that inadequacy before invoking the deeming fiction. A valuation report showing higher fair market value is not enough by itself. The article notes that the revenue also failed to properly examine objections concerning non-comparability of the relied-upon sale instance, the unapproved nature of the colony, absence of amenities, other local sales, the registered valuer's report, and the government-fixed land rate. On those facts, the jurisdictional basis for treating the transfer as a deemed gift was not established.

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Issues: Whether the transfer of immovable property could be treated as a deemed gift under section 4(1)(a) of the Gift-tax Act, 1958 on the basis of alleged inadequacy of consideration.

Analysis: Section 4(1)(a) applies only where property is transferred otherwise than for adequate consideration, and the revenue must establish that the consideration was in fact inadequate. A mere valuation report estimating fair market value does not, by itself, prove that the assessee received consideration less than what was actually paid. The revenue authorities did not properly examine the assessee's objections regarding non-comparability of the relied-upon sale instance, the unapproved nature of the colony, the absence of amenities, the comparable local sale instances, the registered valuer's report, or the government-fixed land rate for the locality. On these facts, the basic jurisdictional requirement for invoking the deeming fiction was not established.

Conclusion: The transfer could not be treated as a deemed gift under section 4(1)(a) of the Gift-tax Act, 1958, and the addition was liable to be deleted.

Ratio Decidendi: A deemed gift under section 4(1)(a) arises only on proof of inadequacy of actual consideration, and not merely because the property is assessed at a higher fair market value.

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