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TMI Blog1978 (4) TMI 119X X X X Extracts X X X X X X X X Extracts X X X X ..... delTownDelhiin 1958 for Rs. 4,460. He constructed a property in the asst. yr. 1966-67 at a cost of Rs. 60,000. The assessee sold the property for Rs. 72,000 by sale deed dt.14th May,1970to his sons, Sh. Surinder Nath Prem Nath. The assessee did not disclose any income from the sale of this property in the return. The assessee s contention was that the sale did not take place during the year under consideration but the ITO overruled this objection of the assessee as the sale took place during the year under consideration. The ITO was, Prima facie, of the view that s. 52(1) was attracted in this case as the sale was made by the assessee in favour of his sons with a view to avoid his tax liabilities under s. 45 of the IT Act, 1961. He determ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en established by the ITO that the transfer was effective in order to avoid or reduce the assessee s tax liability under s. 45 of the Act. According to the assessee s. 52(1) could be applied only to a case of under statement of consideration and not so as to bring about a fictional gain in determining the capital gains. This contention of the assessee found favour with the AAC and he held that s. 52(1)was not attracted in this case. The AAC however, determined the fair market value of the property in question on the date of sale at Rs. 88,800 by computing the cost of the plot at Rs. 80 per sq. yd. and the cost of construction as shown by the assessee in the asst. yr. 1966-67 after allowing depreciation of 2 per cent p.a. thereon. The AAC fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fair market value of property at the time of sale and there is no justification for applying s. 52.(2) in view of the Circular No. 20 (LXXX VI) D of 1964 dt.7th July,1964of the Central Board of Direct Taxes. Next he has urged that the AAC was not justified in applying s. 52(2) as no previous approval of the IAC had been taken and that such an approval could only be taken by the ITO which had been done by the ITO. 5. The representative of the Department, on the other hand, has supported the objections of the Department in its appeal that the AAC erred in taking the value of the plot at Rs. 80 per sq. yd. and in allowing a depreciation of 2 per cent p.a. in the cost of construction in determining the fair market value of the property at Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n is a bonafide one and there is nothing on record to suggest that it was effected with a view to avoid tax liability of the assessee under s. 45 of the IT Act, 1961. According to him, this transfer was effected on account of love and affection of the assessee towards his sons and is bonafide one. 7. We have given our careful consideration to the rival submissions made before us by the learned representatives of the parties. The ITO computed the value of the plot of the property under consideration Rs. 100 per sq. yd. on the basis of the Circular of the Ministry of Works and Housing dt.14th Jan.,1972and the cost of land in the case of sale of plot by Hukum Chand. The AAC took the value of the plot at @ Rs. 80 per sq. yd considering both t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , s. 52(2)is not attracted in any case in this respect, it is unnecessary to consider the other contentions of the learned representatives of the parties. 9. It has been observed by their lordships of the Delhi High Court in the case of Shiv Shankar Lal vs. CIT (1) as follows: "We are in respectful agreement with the view of the Madras High Court that the first proviso to s. 12B(2) which corresponds to s. 52 of the Act does not discourage or avoid honest transactions made out of love and affection or for other conceivable reasons other than the avoidance or reduction of liability to tax on capital gains." We are bound by the decision of the Hon ble High Court of Delhi. From the above observations, it is clear that it is for the Depart ..... X X X X Extracts X X X X X X X X Extracts X X X X
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