COMMISSIONER OF GIFT TAX Vs. CHAMELI DEVI

JUDGEMENT

(1.) AT the instance of Revenue following question has been referred under S. 26(1) of the GT Act, 1958 (in short the 'Act'), by the Income tax Appellate Tribunal, Delhi Bench 'C', New Delhi (in short 'Tribunal'), for opinion of this Court :

(2.) FACTUAL position in a nutshell is as follows : A return of taxable gift was filed by the assessee. AO found that assessee had taken part in the public auction held by Delhi Development Authority (in short 'DDA') in April, 1974, and purchased a plot in Safdarjang area at a cost of Rs. 23,510. The plot was transferred in the name of the deceased's grandson Sh. Rajiv Jhalani in 1975. Assessee's case was that the plot was transferred to two grandsons viz., Sh. Rajiv Jhalani and Sh. Kapil Jhalani. Valuation of the property was done by an approved valuer who while computing the value deducted 50 per cent of the unearned income. AO was of the view that there being no question of payment in relation to unearned increase in the case of a relation there was no scope for deducting 50 per cent of the unearned increase over the initial premium, as was done by the valuer. Valuation report, as prepared by the assessee's valuer, had determined the value of the property in question at Rs. 45,000. The gross value had been determined at Rs. 66,666 and as aforesaid 50 per cent of the increase in the value of the land was deducted. Matter was carried in appeal by the assessee before the Appellate Assistant Commissioner (in short AAC), who held that in terms of para IV(2)(iv) of the terms of the auction, 50 per cent of the unearned increase in the value i.e., the difference between the premium paid and the market value of the plot at the time of transfer shall be paid to the Government.

(3.) WE find that the approach of the Tribunal was somewhat different from that adopted by the AO. While the AO referred to the normal practice adopted of not charging unearned increase in respect of relation, that factual aspect has not been considered by the Tribunal. It is not clear from the orders as to whether in fact there was any payment of the difference in respect of unearned increase. We, therefore, instead of answering the question referred, remit the matter back to the Tribunal for adjudication of that particular aspect. If in reality there has been no payment, the question of allowing a deduction would not arise. If, on the other hand, any amount has been paid in relation to the unearned increase, 50 per cent thereof has to be allowed as a deduction. Reference is accordingly disposed of.