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Issues:
- Determination of whether a transaction dated 26th July, 1956, was a sale or a gift. Detailed Analysis: The case involved a dispute regarding the nature of a transaction dated 26th July, 1956, where a property was transferred by one individual to another for a consideration of Rs. 26,000. The deceased advocate had instructed the property to be purchased in the name of the minor assessee. The Income Tax Officer (ITO) did not accept the transaction as a sale in the assessment year 1967-68, leading to subsequent appeals and a reference to the High Court. The main contention was whether the transaction should be treated as a sale or a gift for tax purposes. The definition of "sale" as per the Transfer of Property Act was crucial in determining the nature of the transaction. The court emphasized that a sale involves the transfer of ownership for a price paid or promised. The presence of money consideration is essential in a sale, as per the Sale of Goods Act. Examining the document dated 26th July, 1956, the court found that it fulfilled all requirements of being a sale, as ownership was transferred for a consideration of Rs. 26,000. The deed clearly indicated a sale transaction with consideration involved, refuting claims of it being a gift. The argument raised by the assessee that every sale must be preceded by an agreement to sell was also addressed by the court. While acknowledging that a sale involves a prior agreement, the court noted that the agreement can be established just before the sale deed is executed. In this case, the recitals of the document demonstrated the existence of an agreement before the sale deed, supporting the conclusion that the transaction was indeed a sale. Furthermore, the issue of consideration was raised by the assessee, citing the Contract Act definition. However, the court found that the consideration of Rs. 26,000 had been deposited with the vendor as per instructions from the deceased, indicating that the consideration was indeed paid in pursuance of the promisor's desire. The court rejected the argument that there was no consideration for the transaction, upholding the Tribunal's decision that the document was a sale deed. In conclusion, the High Court determined that the transaction in question was a sale and not a gift, based on the legal definitions and the specific circumstances of the case. The Commissioner of Income-tax was awarded costs amounting to Rs. 200.
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