1992-VIL-170-ITAT-HYD

Equivalent Citation: ITD 046, 247, TTJ 047, 134,

Income Tax Appellate Tribunal HYDERABAD

Date: 13.07.1992

KODISETTY SURYANARAYANA.

Vs

GIFT-TAX OFFICER.

BENCH

Member(s)  : CHANDER SINGH., ABDUL RAZACK.

JUDGMENT

Per Shri Abdul Razack, Judicial Member-----The assessee has file this appeal against the order of the Deputy Commissioner of Income-tax (Appeals), upholding the order of the Gift-tax Officer.

2. The appellant during the previous year relevant to the asst. year under appeal sold a house site with a shed at Seetaramapuram, Vijayawada for a consideration of Rs. 70,000. The Gift-tax Officer noted that the registration authorities fixed the value of the property for purposes of stamp duty and registration charges at Rs. 1,35,000. The GTO was therefore of the opinion that the appellant has transferred the property otherwise than for adequate consideration and invoked the provisions of section 4(1)(a) of the Gift-tax Act, 1958 and computed the taxable gift in a sum of Rs. 65,000, being market value less apparent consideration. Not being satisfied the matter was taken in appeal before the learned D.C. (Appeals). The D.C. (Appeals) for the reasons discussed by him in impugned order, confirmed the action of the GTO holding that the appellant had transferred the property for inadequate consideration and the provisions of section 4(1)(a) did get attracted. Being unsuccessful with the D.C. (Appeals), the present appeal has been filed before us.

3. It is contended by the assessee's counsel that the Assessing Officer has not embarked upon any enquiry or investigation to find out the true market value of the property as laid down under the provisions of the Gift-tax Act read with the relevant rules. The Assessing Officer got influenced by the ad hoc market value fixed by the registration authorities for the sole purpose of levy of stamp duty and registration charges for purposes of transfer. It is further contended that the values of land and properties are fixed by the registration authorities under the Registration Act, on the basis of municipal ward numbers and localities and no rational or scientific basis is adopted as is being done under the provisions of the Wealth-tax Act or under the Gift-tax Act as per section 16A and section 15(6) of the Wealth-tax Act and Gift-tax Act, respectively. The GTO therefore grossly erred in taking aid of the market value fixed by the registration authorities for purposes of collection of stamp duty and registration charges and the same cannot form the basis for bringing the appellant within the fold of section 4(1)(a) of the Act. It is also submitted by the assessee's counsel that the value of this property as returned for 1984-85 for wealth-tax purposes has been accepted as returned under section 16(1) of the W.T. Act. The assessee's counsel relied on the decision of the Madras High Court in the case of CGT v. Indo Traders Agencies (Madras) (P.) Ltd. [1981] 131 ITR 313 and that of the Hon'ble Supreme Court in the case of K.P. Verghese v. ITO [1981] 131 ITR 597.

4. Relying on the orders of the lower authorities, the learned DR on the other hand submitted that it is not correct to say that the values fixed by the registration authority under the Stamp and Registration Act for purposes of stamp duty and registration charges are arbitrarily fixed. The Registrar of Assurance have authority under the Stamp and Registration Act and empowered to fix the value of the property and the market value fixed for purposes is having basis and the GTO did not go wrong in invoking the provisions of section 4(1)(a) and assessing the appellant accordingly. He also distinguished the authorities cited by the assessee's counsel.

5. After hearing the submissions made before us by the representatives of both the parties and perusing the material available with us and the decisions cited before us, we are of the opinion that the assessee should succeed in this appeal. Admittedly, the Assessing Officer took the aid of the provisions of section 4(1)(a) of the Gift-tax Act considering the value fixed by the registration authorities for purposes of registration of the sale deed of the property in question. The learned DR has not been able to satisfy us as to the manner or basis of the fixation of the market value of the property in question by the registration authority. No material is found on record in this regard. In the absence of such evidence, it is not easy for us to discern whether the value fixed by the authorities for purposes of registration of transferred documents is the true and fair market value. It is no doubt true that the valuation of properties when referred to the valuation officers under the relevant provisions of the Wealth-tax and Gift-tax Laws are arrived at on a more reasonable, rational and scientific basis and more or less conform to the accepted principles of valuation.

6. We have come across a recent decision of the Hon'ble High Court of Andhra Pradesh in the case of M.R.O. and LAO v. Sri Sri Sri Jagannadhaswamyvari Temple, Palakonda [Appeal No. 1654 of 1988, dated 26-3-1992], arising under the Land Acquisition Act, 1894 which is since published in Part-22 of the Andhra Pradesh Law Journal 1992(1) dated 10-6-1992 at page-89 under the "Short Notes of recent cases", wherein their Lordships have held as under:

" The values given in the Basic Value Register cannot be taken as guiding figures to arrive at the reasonable market rate for the land acquired. The values given in the Basic Value Register are fixed taking into account the block-wise area but not on scientific data. When the rates in the Basic Value Register have been fixed on area-wise, without any scientific data the values mentioned in the Basic Value Register cannot be treated as comparable values of market value at the relevant time. The values given in the Basic Value Register can at best be taken into consideration for the purpose of collection of stamp duty only at the time of registration of documents but not for any other purpose. "

We have also gone through the decision of the Madras High Court in Indo Traders & Agencies (Madras) P. Ltd.'s case) wherein their Lordships have before applying the provisions of section of 4(1)(a) of Gift-tax Act, an investigation has to be made by the Assessing Officer to see whether there is an attempt at evasion of tax or whether the relevant transaction is bonafide. Their Lordships further held in the said case that if the consideration which passed between the parties can be considered to be reasonable or fair it cannot be considered to be inadequate because adequate consideration is not necessarily what is ultimately determined by someone else as market value. According to their Lordships of the Madras High Court unless the price was such as to shock the conscience it would not be possible to hold that the transaction is otherwise than for adequate consideration. In the instant case apparently, no enquiry or investigation is made by the Assessing Officer to find out about the adequacy or inadequacy of consideration or whether or not the market value of the said property was fair or reasonable. In the absence of such a categorical finding it cannot be held that the assessee had transferred the property in question without adequate consideration. It is also noticed by us that the assessee and the transferee are not related to each other. No material has been placed before us nor we find the same being available with the Assessing Officer to satisfy him that the transfer was not bonafide and that it was tainted with oblique motives, particularly to evade tax. We have also taken note of the decision of the Hon'ble Supreme Court in the case of K.P. Varghese wherein their Lordships at page 615 have observed :

" It is a well settled rule of law that the onus of establishing that the conditions of taxability are fulfilled is always on the revenue and. . . . "

In our view, therefore, the Assessing Officer was not justified in assessing the appellant invoking the provisions of section 4(1)(a) of the G.T. Act. We therefore vacate the orders of the authorities below and allow the appeal of the assessee

 

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