COMMISSIONER OF INCOME TAX Vs. AMARCHAND B DOSHI

JUDGEMENT

(1.) IN these two departmental references relating to the assessee's asst. yrs. 1971 72 and 1972 73 and 1968 69 to 1970 71, respectively, the Tribunal has referred to this Court the following question of law for opinion under S. 256(1) of the IT Act, 1961 :

(2.) SOME time during the accounting period relevant to the asst. year 1968 69, to be precise on 24th Feb., 1966, the assessee sold an item of property to his wife for a consideration of Rs. 48,000. It is common ground that the fair market value of the property as on the date it was transferred was Rs. 1,49,873 and that its cost price to the assessee was Rs. 17,100. Applying the provisions of s. 52(2) of the IT Act 1961, the ITO worked out the long term capital gains taxable in the assessee's hands on account of the aforesaid transactions, as the fair market value on the date of its transfer for the purpose of levy of tax on capital gains. The applicability of the provisions of S. 52(2) of the Act was challenged by the assessee before the AAC and the Tribunal. It appears that the dispute was taken to this Court at the instance of the assessee. However, counsel for the assessee, though served, was not present and Mr. Jetley, learned counsel for the Revenue was not able to inform the Court as to what happened in that matter.

(3.) AS stated earlier, none appeared on behalf of the assessee, though served. Mr. Jetley, learned counsel for the Department, took us through the provisions of ss. 45, 48, 52 and 64 (as they stood at the material time) to show that S. 52(2) did not create any legal fiction as imagined by the AAC or the Tribunal. According to him, the purport and scope of S. 52(2) was that, where a property was transferred for less than 15 per cent of the market value, the fair market value of the property as on the date of the transfer could be taken for that purpose as the full value of the consideration for such capital assets. It certainly did not mean that the provisions created a fiction that the assessee had received the full value of that consideration. Unless there was a fiction of that kind, Mr. Jetley stated that it would have to be held for the purpose of S. 64(iii) that the property herein was transferred otherwise than for adequate consideration.