Related person valuation fails where only family links and shared premises are shown without evidence of extra commercial consideration.

The mere fact that two partners of the buying concern were relatives of the managing director, and that both concerns operated from the same building, was held insufficient to prove that they were related persons or that the sales were anything other than principal-to-principal transactions. In the absence of evidence of extra commercial consideration, special favour, or direct or indirect interest in each other's business, valuation could not be based on the buyer's resale price adopted by the department.

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Issues: Whether the manufacturer and the partnership concern were related persons so as to justify valuation on the basis of the latter's resale price.

Analysis: The record showed only two connecting circumstances, namely that two partners of the buying concern were the wife and nephew of the managing director and that both concerns operated from the same building. These facts, without more, were held insufficient to establish that the transactions were not on a principal to principal basis, that any extra commercial consideration existed, that special favour was shown, or that either concern had direct or indirect interest in the business of the other.

Conclusion: The concerns were not proved to be related persons, and the valuation could not be based on the resale price adopted by the departmental authorities.

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