Deemed gift under the Gift-tax Act was rejected where the sale-price difference was treated as received by the transferor.

Difference between the stated sale consideration and the market value was held not assessable as a deemed gift where that difference had already been treated as received by the transferor in final wealth-tax proceedings. Section 4(1)(a) of the Gift-tax Act applies only when property is transferred for inadequate consideration and the excess of market value over consideration is deemed to be a gift; it does not operate where the alleged difference is found to have been received by the transferor. The question was answered in favour of the assessee and against the Revenue.

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Issues: Whether the difference between the sale consideration stated in the document and the market value of the property could be assessed as a deemed gift under section 4(1)(a) of the Gift-tax Act, 1958.

Analysis: The amount representing the difference between the declared consideration and the market value had already been treated as being in the assessee's hands in wealth-tax proceedings, and that assessment had attained finality. On that footing, it could not be said that the transferor had not received the difference. Section 4(1)(a) applies where property is transferred otherwise than for adequate consideration and the excess of market value over consideration is deemed to be a gift; it does not apply where the difference is found to have been received by the transferor.

Conclusion: The question was answered in the affirmative and against the Revenue, and the amount was held not assessable as a deemed gift.

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