Deemed gift taxation requires proof of inadequate consideration; mere stamp duty valuation is not enough.

For invoking deemed gift taxation under section 4(1)(a) of the Gift-tax Act, the Revenue must prove that the property was transferred for inadequate consideration on the basis of a fair and proper enquiry. A mere stamp duty valuation, without material showing that it reflected the true market value on the date of transfer, is insufficient. Where the assessing authority does not independently examine adequacy of consideration, bona fides of the transaction, or any attempt at tax evasion, the transfer cannot be treated as one made without adequate consideration, and no deemed gift is taxable.

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Issues: Whether the transfer of the property was otherwise than for adequate consideration so as to attract deemed gift taxation under section 4(1)(a) of the Gift-tax Act.

Analysis: The Revenue relied on the stamp duty valuation fixed by the registration authorities, but no material was brought on record to show how that value represented the true market value of the property on the date of transfer. The assessing authority had not independently investigated whether the consideration was inadequate, whether the transaction was bona fide, or whether there was any attempt at tax evasion. The legal position applied was that adequate consideration is not to be judged merely by an external valuation and that the burden lies on the Revenue to establish inadequacy before invoking the deemed gift provision.

Conclusion: The transfer could not be treated as one made without adequate consideration, and no deemed gift was taxable in the hands of the assessees.

Ratio Decidendi: For invoking section 4(1)(a) of the Gift-tax Act, the Revenue must prove that the property was transferred for inadequate consideration on the basis of a fair and proper enquiry; a mere stamp duty valuation, without supporting material, is insufficient.

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