Computation of capital gains on the basis of the fair market value. - Income Tax - 965/CBDT

INSTRUCTION NO. 965/CBDT Dated : July 2, 1976 Section(s) Referred: 4(1)(a) Statute: Gift Tax Act, 1958 In terms of section 4(1)(a) of the Gift-tax Act, 1958, where property is transferred otherwise than for adequate consideration, the amount by which the market value of the property at the date of the transfer exceeds the value of the consideration shall be deemed to be a gift made by the transferor. 2. Section 52 of the I.T. Act, 1961, contains provisions for computation of capital gains on the basis of the fair market value in cases where the consideration for transfer is less than such fair market value. As the cases which would attract the provisions of section 52 would also attract the provisions of section 4(1)(a) of the Gift-tax Act, the Income-tax Officers should, while considering the applicability of section 52, also examine the applicability of section 4(1)(a) of the Gift-tax Act, and initiate proceedings under the Gift-tax Act, wherever required.