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2014 (11) TMI 889 - HC - Income TaxInterpretation of section 15(6) Gift Tax Act r.w. Rule 11A of income tax Rules – treatment of difference in sales transaction as Gift - Bonafide transaction - Reference to Valuation officer - Whether the Tribunal is right in deleting gift tax levied by invoking the provisions of section 4(1) of the Gift Tax Ac and in doing so, erred in interpreting section 15(6) read with Rule 11A of the Income Tax Act and the Rules – Held that:- Provisions of sec. 4(1)(a) of the G.T. Act cannot be invoked in case of transactions which are bonafide and no attempt of evasion of tax is discernible – in Commissioner Of Gift-Tax, Tamil Nadu-I Versus Indo Traders And Agencies (Madras) Pvt. Limited [1979 (6) TMI 8 - MADRAS High Court] it has been held that unless the price realised for transfer was such as to shock the conscious of the Court, if would not be possible to hold that the transaction is otherwise than for adequate consideration. Rule 11A of the GT Rules as well as rule 3B of the WT Rules fairly bring out the legislative intention for accepting the declared value of an asset for the purposes of wealth tax and gift assessments if the difference between the declared value and the fair market value is less than 33 1/3% or ₹ 50,000 - the market value as determined by the DVO under the W T Act as on 31.3.84 is ₹ 178.49 lakhs whereas the realised value shown by the assessee is ₹ 143.50 lakhs - The difference being merely ₹ 35 lakhs which is much less than the percentage prescribed in Gift tax Rules or Wealth-tax Rules - the transaction involving sale of Kashmir House by the assessee to its 100% subsidiary is a bonafide transaction and does not reflect any attempt of tax evasion on the part of the assessee company - provisions of sec. 4(1)(a) of the GT Act cannot be invoked for treating the sale transaction as a deemed gift – thus, the order of the Tribunal is upheld – Decided against revenue.
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