Capital gains valuation on property sale requires proof of understatement before market value can replace declared consideration.

In computing capital gains on sale of immovable property, the sale consideration recorded in the deed could not be replaced with market value unless understatement was proved by evidence. The Tribunal found no material showing that the assessee received any amount over and above the stated consideration, and held that section 52 does not authorise substitution of market value merely because the declared price appears inadequate. Following the Karnataka High Court ruling on section 52, it required adoption of the actual sale consideration and rejected the higher market value.

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Issues: Whether, in computing capital gains on sale of immovable property, the sale consideration shown in the deed could be rejected and the market value substituted in the absence of evidence that the assessee received more than the stated consideration.

Analysis: The Tribunal noted that the revenue had not brought any material to show receipt of any extra amount over and above what was recorded in the sale deed. It applied the principle that section 52 does not permit substitution of market value merely because the consideration appears inadequate, and followed the binding Karnataka High Court ruling that clause (2) of section 52, like clause (1), is inapplicable to sales for inadequate consideration unless understatement is established by evidence.

Conclusion: The actual sale consideration of Rs. 32,000 was required to be adopted and the market value of Rs. 54,000 could not be substituted. The issue was decided in favour of the assessee.

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