COMMISSIONER OF INCOME TAX Vs. C C SUBBARAYUDU

JUDGEMENT

(1.) This is a reference arising under the Gift-tax Act. The commissioner of Income-tax sought reference of the following question for the consideration of this court in connection with the assessment year 1970-71 :

(2.) The assess purchased ac. 4-52 cents of land in the year 1964 together with a building for a consideration of Rs. 35,000. The value of the land was found to be Rs. 15,000 and the value of the building Rs. 20,000. The land was transferred by the assessee in favour of his wife and his two minor children in the year 1969. The consideration specified in the deed of sale was Rs. 14,500. The fifth-tax Officer initiated proceedings for the purpose of levying gift-tax under section 4(1)(a) of the Gift-tax Act ("the Act", for short). According to the Gift tax Officer the value of the land when it was sold in the year 1969 was not less than Rs. 1,00,200 and the transfer of the same for a consideration of Rs. 14,500 attracted the application of the provision of section 4(1)(a) of the Act, as the property was transferred for inadequate consideration. The difference between the market value of the lands sold and the actual said price was deemed to be a "gift" within the meaning of section 4(1)(a) of the Act, and assessed accordingly for the assessment year 1970-71. The market value of the land sold by the assessee in the year 1969 was determined at Rs. 1,00,200 with reference to certain comparable sales and also taking into consideration certain information contained in the report of the approved valuer.

(3.) The assessee challenged the correctness of the assessment on the basic ground that the lands were sold for adequate consideration. The appeal before the first appellate authority having been dismissed, a second appeal was carried to the Tribunal. The Tribunal went into the legal implications of section 4(1)(A) of the Act. According to the Tribunal the provisions of section 4(1)(A) of the Act are not applicable and accordingly it quashed the assessment. The Commissioner of Income-tax is in reference, being aggrieved by the decision of the Tribunal.