1988 (2) TMI 45

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....1)(a) of the Gift-tax Act were not attracted in respect of sales made by the assessee to Smt. Dhanamma, his wife, Sri C. S. Krishna Murthy and Sri C. Subbarao, minor sons, on September 16, 1969, of an aggregate area of ac. 4-171/1 cents, for an aggregate consideration of Rs. 14,500 ?" The assessee purchased ac. 4-52 cents of land in the year 1964 together with a building for a consideration of Rs. 35,000. The value of the land was found to be Rs. 15,000 and the value of the building Rs. 20,000. The land was transferred by the assessee in favour of his wife and his two minor children in the year 1969. The consideration specified in the deed of sale was Rs. 14,500. The Gift-tax Officer initiated proceedings for the purpose of levying gift-....

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....han for adequate consideration, the amount by which the market value of the property at the date of the transfer exceeds the value of the consideration shall be deemed to be a gift made by the transferor. The ingredients of this provision are, therefore, clear. It must be shown that the market value of the property at the time of transfer was greater than the value specified in the instrument of transfer. The market value has to be determined by the Gift-tax Officer with reference to relevant evidence. Once the market value is fixed on proper and relevant data, the Gift-tax Officer has no further choice in the matter except to deem the difference between the market value and the consideration specified in the instrument of transfer as a gif....

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....servation. The question is not whether the consideration for which the property is shown to have been sold is such that it would shock the conscience of the court. The real question is whether the consideration specified in the instrument of transfer fell short of the real market value of the property. We may refer to the decision of the Madras High Court on which considerable reliance was placed by learned counsel for the assessee and that is the decision in CGT v. Indo Traders and Agencies (Madras) P. Ltd. [1981] 131 ITR 313. At page 322, the High Court has made the following observations : " The relevancy of the market price as shown by the provision is only to fix the quantum of the value of the gift after it is found that the transa....