Adequate consideration in property transfers defeats deemed gift-tax where stated price is reasonable and market undervaluation is unproven.

Sales of immovable property were held to be for adequate consideration where the Tribunal found the stated price was not less than market value and the alleged shortfall from fair market value was not established. A higher valuation by the valuation cell, by itself, was insufficient to show that the transfer lacked adequate consideration. On that basis, the transaction did not fall within the deemed gift provision under section 4(1)(a) of the Gift-tax Act, 1958, and no gift-tax liability arose.

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Issues: Whether the transfer was without adequate consideration so as to attract gift-tax under section 4(1)(a) of the Gift-tax Act, 1958.

Analysis: The assessment years in question concerned sales of immovable property for stated consideration. The Tribunal had already found, on the facts, that the consideration reflected in the transfer was not less than the market value and that the difference between the fair market value and the stated price was not established. In such a situation, the transfer could not be treated as lacking adequate consideration merely because a valuation cell arrived at a higher figure. A transfer is not without adequate consideration when the price paid is reasonable or fair, and gift-tax cannot be levied unless the transaction is shown to fall outside that standard.

Conclusion: The transfer was for adequate consideration and no deemed gift arose under section 4(1)(a) of the Gift-tax Act, 1958; the issue was answered in favour of the assessee and against the Department.

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