2008 (10) TMI 585 - AT - Income Tax

Summary

Issues involved:
1. Assessment of capital gains based on property transfer.
2. Interpretation of the term "gift" in relation to the Income-tax Act and its implications on capital gains computation.

Detailed Analysis:
1. Assessment of capital gains based on property transfer:
The appeal before the Appellate Tribunal ITAT Vishakhapatnam pertained to the assessment year 1997-98, where the assessee declared total income including income from property, pension, and capital gains. The dispute arose when the Revenue authorities reopened the assessment, arguing that the computation of income under the head "Capital gains" was incorrect. The assessee sold a property inherited from her husband and claimed the indexed cost of acquisition based on the price her husband acquired the property for in 1980. However, the Assessing Officer calculated the capital gains at a higher amount, considering the cost differently. The assessee contended that the value of the property relinquished by her children should be considered the cost to her, rather than the price paid under the relinquishment deed. This led to a disagreement on the computation of capital gains, resulting in the appeal.

2. Interpretation of the term "gift" in relation to the Income-tax Act:
The crux of the issue revolved around the interpretation of the term "gift" under section 49 of the Income-tax Act and its implications on the computation of capital gains. The assessee argued that the term "gift" should encompass a broader definition, including deemed gifts as per the Gift-tax Act. The contention was that the property relinquished by the children for a nominal consideration should be valued at the actual value, treating the differential amount as a deemed gift. However, the Assessing Officer and the first appellate authority rejected this argument. The Tribunal, after considering the submissions from both sides, referred to a judgment of the Andhra Pradesh High Court which emphasized that the definition of "gift" under the Gift-tax Act cannot be directly applied to interpret the term in the Income-tax Act. The Tribunal concluded that the decisions of the tax authorities were in line with the provisions of the Income-tax Act and did not warrant any intervention. As a result, the appeal filed by the assessee was dismissed by the Tribunal on October 31, 2008.