Applicability of Sec.52 of IT Act & 4(1) of Gift Tax Act in case of transfer of asset for less then adequate consideration.

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..... is transferred for less than adequate consideration the provisions of sec.52 of the I.T.Act 1961 and sec.4(1) of the Gift-tax Act 1958 can be invoked simultaneously provided of course; the other conditions are satisfied. 2. The Supreme Court of India have in their judgement in the case of K.P.Varghese Vs. ITO Ernakulam and another (1981) 131 ITR 597 held that sub-section (2) of sec.52 cannot be .....

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..... he Gift-tax Act, 1958. If a capital asset is transferred for a consideration below its markets value the difference between the market value and the full value of the consideration received in respect of the transfer would amount to a gift liable to tax under the G.T. Act, 1958 but if the construction of sub-section(2) contended for on behalf of the revenue were accepted such difference would also .....

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..... f the latter the provisions of section 4(1) of Gift Tax Act, 1958 would be attracted provided other conditions laid down in the respective Acts are fulfilled. It may however be appropriate in certain cases to invoke, as the case may be either of the two provisions of law stated above also on a protective basis. 4. This may be brought to the notice of all officers working in your charge. - Circ .....

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