Simultaneous invocation of Sec 52 of IT Act and Sec 4(1) of Gift Tax Act. - Income Tax - 1359/CBDT

INSTRUCTION NO. 1359/CBDT Dated: September 23, 1980 Attention is invited to boards instruction no.965 dated 2nd July 1976. It was stated therein that the assessing officers should consider applicability of sec.4(1)(a) of the G.T.Act in cases in which the provisions of sec.52 of the I.T.Act are invoked. 2. A doubt has been raised in view of the different high court judgements whether provisions of sec.4(1) of the G.T.Act and provisions of sec.52 of the I.T.Act can be invoked simultaneously in respect of the same transaction. 3. The Delhi High court in the case of Shiv Shankar Lal vs. CIT Delhi has held that the word gift appearing in sec.47(iii) of the I.T.Act would include a gift as defined under the Gift-tax Act and as such when the difference between the market value of an asset and the actual consideration is subjected to G.T. the provisions of sec.52 of the I.T.Act cannot be invoked in view of the provisions of sec.47(iii) of the said act. The Punjab and Harayana High court on the other hand have held in the case of sardarni Ahalaya Raghubir Singh Raja Sansi vs. CIT, Patiala (97 ITR 425) that gift-tax cannot be levied in a case in which provisions of sec.52 of the I.T.ACt are invoked. The Kerala High court decision in the case of Income-tax officer vs. K.P.Vargheese (91 ITR 49), Andhra Pradesh High court in the case of ITO vs Boragadda saya Narayana(106 ITR 333) and the decision of Calcutta High court on 7-2-1978 in the case of C.I.T. vs. S.N. Mehrotra (122 ITR 313)support the view that the provisions of sec.4 of the G.T.Act and section 52 of the I.T.Act can be invoked simultaneously in respect of the same transaction. 4. The board would like to clarify that in a case in which the asset is transferred for less than adequate consideration provisions of sec.52 of the I.T Act and sec.4(1) of the G.T.Act can be invoked simultaneously provided of course the other conditions are satisfied. 5. This instruction should be followed in all the charges except those in which there is a High court decision contrary to the view expressed above.