Property transfer to daughter-in-law deemed gift, not sale, exempt from capital gains tax. Sections 50C, 54F not applicable.

The Tribunal ruled that the transfer of property to the daughter-in-law was a gift, not a sale, and therefore not subject to capital gains tax. As a result, the issues regarding the sale consideration under Section 50C and the deduction under Section 54F were not addressed separately and deemed infructuous. The appeal was partly allowed in favor of the assessee.

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Issues Involved:
1. Treatment of gift of immovable property to daughter-in-law as chargeable to capital gain tax.
2. Treatment of sale consideration of the property under Section 50C without referring the matter to DVO.
3. Deduction under Section 54F with reference to deemed consideration instead of actual consideration.

Summary:

Issue 1: Treatment of Gift as Capital Gain
The assessee contended that the transfer of property to his daughter-in-law was a gift, not a sale, and thus should not be subject to capital gains tax. The AO treated it as a sale based on the executed sale deed, which mentioned a consideration of Rs. 3 lacs. The assessee filed an affidavit stating that no consideration was received and offered to produce his daughter-in-law to confirm this. The AO did not require the assessee to produce her, and the affidavit remained uncontroverted. The Tribunal held that the property transfer was indeed a gift and not a sale, thus no capital gain could be computed. Ground No. 1 was allowed.

Issue 2: Treatment of Sale Consideration under Section 50C
The AO computed the sale consideration based on the value determined by the Sub-Registrar, which was Rs. 12,84,450/-. The assessee argued that the AO should have referred the matter to the DVO due to the significant variation in the stamp duty valuation of different parts of the plot. The Tribunal did not specifically address this issue, as it became infructuous due to the decision on Issue 1.

Issue 3: Deduction under Section 54F
The AO allowed the deduction under Section 54F based on the deemed consideration of Rs. 12,84,450/- instead of the actual consideration of Rs. 7 lacs. The assessee argued that the deduction should be calculated based on the actual consideration. The Tribunal did not decide on this issue separately, as it became infructuous due to the decision on Issue 1.

Conclusion:
The appeal was partly allowed, with the Tribunal ruling that the transfer to the daughter-in-law was a gift, thus no capital gain could be computed. Consequently, the issues related to the sale consideration under Section 50C and the deduction under Section 54F were not decided.

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