COMMISSIONER OF INCOME-TAX Vs. ARCHANA R DHANWATAY

JUDGEMENT

(1.) This reference is made at the instance of the Commissioner of Income-tax, Nagpur under sec. 256(1) of the I.T. Act, 1961. The question referred by the Tribunal are as follows :

(2.) The assessee was one of the co-owners of a building known as "Sandoz Building" at Bombay. During the assessment year 1974-75, the building was sold by all the co-owners to H. H. Dr. Syedna Taher Saifuddin Memorial Foundation, Bombay, for consideration of Rs. 35,00,000. The ITO, having taken the view that there was reason to believe that the fair market value of the property on the date of transfer exceeded the apparent consideration by more than 15%, made a reference under sec. 55A of the I.T. Act to the District Valuation Officer, Bombay, directing him to make a report on the value of the building on the date of its transfer.

(3.) The District Valuation Officer made a report that the fair market value of the said property was estimated at Rs. 65,08,000. The ITO took recourse to the provisions of sec. 52(2) of the I.T. Act and adopted the fair market value as the full value of the consideration for the purpose of computing capital gains from the transfer of the said building. The assessee, who had 8% share in the building sold, was thus assessed for capital gains at Rs. 2,77,786. Making allowance for the basic exemption of Rs. 5,000, long-term capital gains were estimated at Rs. 2,72,786.