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Issues:
Gift-tax assessment based on consideration amount and rights of re-conveyance and pre-emption retained by the assessees. Analysis: The judgment involves appeals by two assessees against gift-tax assessments completed under section 15(3) of the Gift-tax Act. The assessees jointly owned a property in Coimbatore, which they sold to a public limited company managed by one of the assessees. The sale consideration was Rs. 4,46,000 with rights of reconveyance and pre-emption retained. The assessing officer valued the property at Rs. 7,44,000 based on guidelines, subjecting the difference to gift-tax. The Dy. Commissioner held the rights were sham and upheld the gift-tax assessment. The assessees argued the consideration included the rights, citing relevant court judgments. The Departmental Representative valued the property higher, but the Tribunal found the consideration reasonable, considering the rights valuable. The Tribunal analyzed the sale deed clauses showing the consideration included the sum and the rights retained by the assessees. Referring to court judgments, it emphasized that adequacy of consideration must be judged based on the circumstances of the transaction. The Tribunal found the consideration reasonable, including the value of the rights retained by the assessees. It highlighted that the valuation by the registering authority was not contested, but it did not preclude the assessees from presenting correct facts to the Income-tax Department. Following the Madras High Court decision, the Tribunal concluded that the consideration for the sale was adequate, setting aside the gift-tax assessments. In conclusion, the Tribunal allowed the assessees' appeals, canceling the gift-tax assessments.
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