1982 (6) TMI 164 - AT - Income Tax

Appellate Tribunal allows deduction of additional stamp duty in gift tax appeal

The Appellate Tribunal found that the charge to gift tax was attracted as the transfer of property was not for adequate consideration. The Tribunal ... - Issues:- Gift tax assessment on the transfer of property for inadequate consideration.- Claim for deduction of additional stamp duty under section 18A of the GT Act.Gift Tax Assessment:The appeal before the Appellate Tribunal ITAT MADRAS-B involved a gift tax assessment on the transfer of certain lands from the late R. Veeraswamy Reddiar to his son-in-law, Shri. R. Purushothaman, for an allegedly inadequate consideration. The Sub-Registrar valued the lands at Rs. 58,065, but the transfer took place for Rs. 27,750. The Gift Tax Officer (GTO) treated the difference as the value of the gift and assessed it for tax after allowing necessary exemptions. The assessee contended that the transaction was bona fide and that the Sub-Registrar's valuation was not conclusive of the correct market value. However, during the appeal, the assessee did not provide arguments supporting these contentions. The Departmental Representative supported the GTO's assessment. The Tribunal found that the charge to gift tax was attracted under section 4(1)(a) as the transfer was not for adequate consideration. The only claim made was for a deduction of additional stamp duty paid on the enhanced value, which the Tribunal analyzed under section 18A of the GT Act.Deduction of Additional Stamp Duty under Section 18A:Section 18A of the GT Act allows for a deduction of stamp duty paid on an instrument of gift of property if the gift tax payable exceeds Rs. 1,000. The assessee argued that the stamp duty paid on the additional amount should be allowed as a deduction. The Departmental Representative contended that the section did not apply as the document was an instrument of sale, not gift. However, the Tribunal held that the gift tax was charged on the difference between market value and actual consideration, creating a legal fiction of a deemed gift under section 4(1)(a). The Tribunal reasoned that the payment of additional stamp duty was necessary for the valid conveyance of the property, making it integral to the deemed gift. Therefore, the Tribunal allowed the deduction of additional stamp duty under section 18A, extending the legal fiction to all relevant purposes. As a result, the Tribunal partly allowed the appeal, directing the deduction of additional stamp duty in determining the value of the gift.