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Interpretation of section 4(1)(a) of the Gift-tax Act for determining adequacy of consideration in property transfer. Analysis: The judgment pertains to a reference under the Gift-tax Act regarding the adequacy of consideration in a property transfer. The Commissioner of Income-tax sought reference on whether the provisions of section 4(1)(a) of the Act were applicable to sales made by the assessee to his wife and minor sons in 1969. The Gift-tax Officer assessed the transaction as a gift due to the alleged inadequate consideration. The market value of the land sold was determined at Rs. 1,00,200, significantly higher than the sale price of Rs. 14,500. The Tribunal, however, quashed the assessment, stating that section 4(1)(a) was not applicable. The court analyzed section 4(1)(a) which deems a difference between market value and consideration as a gift if transferred for inadequate consideration. The court emphasized that market value must be determined by relevant evidence, and once established, the difference is deemed a gift. The Tribunal's failure to assess the market value properly was highlighted. The court stressed the importance of determining market value based on relevant data before concluding on the adequacy of consideration. The court referenced a Madras High Court decision, emphasizing that once inadequate consideration is established, the market value must be compared with the consideration to determine the gift amount. The court criticized the Tribunal for not conducting a proper assessment of market value and consideration adequacy. It directed the Tribunal to reevaluate the market value based on relevant data and determine if there was inadequate consideration as per section 4(1)(a). The judgment emphasized the need for a thorough analysis before deeming a transaction as a gift. The court returned the reference unanswered, instructing the Tribunal to follow legal principles and provide both parties with necessary opportunities for the process.
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