Deemed gift valuation fails where the same property cannot be assigned inconsistent values across gift-tax and income-tax proceedings.

Transfer of an assessee's 1/3rd share in jointly owned property for stated consideration was examined under the Gift-tax Act, with the valuation in gift-tax proceedings aligned to the departmental valuation used in income-tax proceedings. Because the income-tax appellate finding had already deleted the capital-gains addition on the basis that excess consideration was not proved, the same transaction could not be given inconsistent valuations in the two proceedings. On that basis, the foundation for treating the differential as a deemed gift failed, and computation under section 4(1)(a) could not be sustained on merits; the deemed gift was therefore nil.

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Issues: Whether section 4(1)(a) of the Gift-tax Act could be invoked on the transfer of the assessee's 1/3rd share in the property, and whether the deemed gift was liable to be taken at any value when the income-tax proceedings had accepted the transaction on the same valuation basis.

Analysis: The transfer was of the assessee's 1/3rd share in a jointly owned property for stated consideration. The valuation adopted in the gift-tax proceedings was the departmental valuation used in the income-tax matter, but the appellate finding in the income-tax proceedings had deleted the capital-gains addition on the basis that excess consideration had not been proved. On that footing, the same property on the same date could not be assigned inconsistent valuations for the two proceedings. Since the basis for treating the difference as a deemed gift failed, the computation under section 4(1)(a) could not survive on merits.

Conclusion: Section 4(1)(a) was not sustainable on the facts, and the deemed gift was held to be nil.

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