COMMISSIONER OF INCOME TAX Vs. TIBRUZ MUSTAFA BILGEN

JUDGEMENT

(1.) AT the instance of the Revenue, the following two questions have been referred to this court for its opinion by the Income-tax Appellate Tribunal :

(2.) THE assessee in this case is an individual and she was a co-owner of a property in Mount Road, Madras, with 38/72 shares. THE said property is said to have been sold for a sum of Rs. 5,00,000 in the previous year ended on March 31, 1970, corresponding to the assessment year 1970-71. THE assessee elected to adopt the market value as on January 1, 1954, for the purpose of capital gains and the market value was put at Rs. 4,00,000. THE Income-tax Officer found that the assessee inherited the property from her father, late Shri Mustafa, and in the estate duty assessment relating to the said Shri Mustafa, the value of the property has been finally fixed at Rs. 8,39,000. THE Income-tax Officer, therefore, invoked the provisions of section 52(2) of the Income-tax Act, adopted the fair market value as Rs. 8,39,000 and worked out the capital gains accordingly and the assessee's share was determined at Rs. 1,89,014. Deducting the basic exemption of Rs. 5,000, the chargeable capital gains were worked out at Rs. 1,84,014.

(3.) THE question is whether the decision of the Tribunal in respect of the income-tax assessment could legally be sustained. According to the Tribunal, section 52 could be invoked by the Income-tax Officer for the purpose of assessing the capital gains only if the stated consideration is less than the actual consideration that passed between the parties in respect of the transaction and if the stated consideration had not been shown to be different from the actual consideration that passed between the parties, then there is no room for invoking section 52. THE Tribunal sought support for the said view from a decision of this court in Sundaram Industries (P) Ltd. v. CIT [1969] 74 ITR 243. THE view taken by this court in Sundaram Industries (P) Ltd. v. CIT [1969] 74 ITR 243 has been followed in the subsequent decisions of this court in CIT v. Rikadas Dhuraji [1976] 103 ITR 111 and Addl. CIT v. P. S. Kuppuswami [1978] 112 ITR 1012. THE Supreme Court in K. P. Varghese v. ITO [1981] 131 ITR 597 has also accepted that view as correct. In view of the said uniform view taken by the courts with reference to the interpretation of section 52 of the Income-tax Act, the view taken by the Tribunal should be taken to be quite in accordance with the true legal position.