Estate Duty Act deemed gift theory rejected where sale consideration below market value cannot be treated as estate inclusion.

Section 9 read with Explanation 2 to section 2(15) of the Estate Duty Act, 1953 does not create any deemed gift, and the Act cannot be expanded by borrowing that concept from the Gift-tax Act. A transaction treated as a sale cannot have an alleged deemed gift segregated from it merely because the sale consideration is below market value. Explanation 2 to section 2(15) applies to extinguishment of rights, but it does not support the mixed sale-and-deemed-gift theory advanced by the Revenue. Accordingly, the difference between market value and sale consideration was not includible in the deceased's estate on that basis.

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Issues: Whether the provisions of section 9 read with Explanation 2 to clause (15) of section 2 of the Estate Duty Act, 1953, applied to the transaction and whether the difference between the market value and the sale consideration could be treated as a deemed gift includible in the deceased's estate.

Analysis: Section 9 and Explanation 2 to section 2(15) of the Estate Duty Act, 1953, do not provide for any deemed gift. The scheme of the Estate Duty Act cannot be expanded by importing the concept of deemed gift from the Gift-tax Act. The transaction in question was treated as a sale, and the alleged deemed gift could not be segregated from that sale transaction. Explanation 2 to section 2(15) applies where there is extinguishment of rights, but it does not cover a mixed sale and deemed gift theory in the manner suggested by the Revenue.

Conclusion: The provisions of section 9 read with Explanation 2 to clause (15) of section 2 of the Estate Duty Act, 1953, were not attracted. The question was answered in favour of the assessee and against the Revenue.

Ratio Decidendi: A difference between market value and stated sale consideration cannot, in the absence of an express provision in the Estate Duty Act, 1953, be treated as a deemed gift or included in the estate by invoking section 9 and Explanation 2 to section 2(15).

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