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Issues:
1. Whether the sale by the assessee's father of the property was a gift to the extent of 2/3rds, allowing the assessee to adopt the fair market value as the 'cost of acquisition' as on January 1, 1954. 2. Whether there was a case for enhancement of capital gains as proposed by the Income-tax Officer. Analysis: Issue 1: The assessee sold a plot of land and a structure, calculating the capital gain based on the market value as of January 1, 1954. The Income-tax Officer disputed this valuation, estimating it lower. Later, it was discovered that the property was purchased by the assessee's father and claimed to be a gift to the assessee. The Appellate Assistant Commissioner accepted this claim but used the Income-tax Officer's valuation, leading to a capital gain computation of Rs. 2,40,071. The Tribunal, considering the circumstances, deemed 2/3rds of the property as a gift and reduced the capital gain to Rs. 2,35,514, providing relief to the assessee. The High Court agreed with the Tribunal, concluding that the transaction was indeed a gift, given the history of the property's purchase and the circumstances surrounding the sale. Issue 2: The Department appealed, arguing against treating the sale as a gift and estimating the fair market value as of January 1, 1954. The Tribunal, however, found the circumstances surrounding the sale suspicious, especially the low sale price and the relationship between the parties. By assuming 2/3rds of the property as a gift, the Tribunal reduced the capital gain. The High Court upheld this decision, affirming that the transaction was a gift and not a sale, thereby rejecting the Revenue's appeal for enhancement of capital gains. In conclusion, the High Court affirmed the Tribunal's decision, holding that the property transaction was a gift, justifying the estimation of fair market value as of January 1, 1954, and dismissing the Revenue's appeal for capital gains enhancement.
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