COMMISSIONER OF GIFT TAX Vs. HASAN MUMTAZ

JUDGEMENT

(1.) AT the instance of the Revenue, the following questions have been referred by the Income-tax Appellate Tribunal under Section 26(3) of the Gift-tax Act:

(2.) IN assessment year 1967-68, the assessee sold his house situated at Station Road, Bareilly, for Rs. 1,00,000. IN the assessment year 1967-68, the INcome-tax Officer with the approval of the INspecting Assistant Commissioner applied the provisions of Section 52 of the INcome-tax Act and computed capital gains on the footing that the fair market value of the said property was much higher. Ultimately, in the second appeal, the Tribunal fixed the sale proceeds for the said property at Rs. 1,52,000. After these proceedings were over, the Gift-tax Officer initiated assessment proceedings against the assessee on the footing that in the deemed sale proceeds, the component of Rs. 52,000 as aforesaid constituted deemed gift within the meaning of Section 4 of the Gift-tax Act and the assessee had failed to furnish return in respect of the said gift. Holding the value of the property to be Rs. 1,52,000, the INcome-tax Officer brought to gift-tax Rs. 52,000. On appeal, the Appellate Assistant Commissioner relied on the decision in Sardarni Ahilya Raghbir Singh Raja Sansi v. CIT [1974] 97 ITR 425 (P and H) and held that no gift-tax could be charged on the difference between the declared consideration and the deemed value. The Revenue preferred a second appeal before the INcome-tax Appellate Tribunal. The appeal was dismissed and, thereafter, on an application made under Section 26(3) of the Gift-tax Act, the present application has been filed.

(3.) IN ITO v. K.P. Varghese [1973] 91 ITR 49 (Ker) [FB], the question of taxability both under Section 52 of the INcome-tax Act and under the Gift-tax Act was considered. The majority took the view that (at page 63):