A two-judge bench of the Madras High Court has held that the guideline value for the purpose of the valuation of stamp duty and registration can be taken as the basis for the purpose of determining the value of the gift as against the value as per Schedule II of Gift Tax Act.
The assessee is an individual. The department framed an assessment under the Act for the assessment year 1991-92 on the ground that the taxable gift exceeding Rs.12 lakhs has escaped assessment in connection with a sale of the immovable property. The Assessing Officer noted that the price quoted in the sale deed was not true or in other words, the property was disposed of for an inadequate consideration falling within the mischief of Section 4 of the Act. Accordingly, the assessment was completed on 31.03.1995 demanding a total amount of Rs.6,92,220/- as a gift tax and thereafter, by order dated 13.08.1996 imposed a penalty of Rs.50,000/-.
On appeal, the Tribunal upheld the order of the Assessing Officer. Aggrieved by the order, the assessee approached the High Court for relief.
While upholding the order of the Tribunal, Justice T N Sivagnanam and Justice Sathi Kumar Sukumara Kurup noted that the assessee sought to rely on those documents to show that the guideline value was always been high and the market value of the property was low.
The Court held that “in any event, we are not on the valuation but we are here on the conduct of the assessee as to how he understood the concept of valuation and we are clear that the assessee was clear in his mind as to how the valuation is required to be done. Therefore, to state at this juncture that the valuation has not been done in terms of Schedule II of the Gift Tax Act is an argument that is stated to be rejected. That apart, when we examine the submissions made by the assessee before the CGT(A), an alternate submission was made stating that on and after 01.04.1987 after sub-section (2) was inserted in Section 3 of the Act, the tax can be at the rate of 30% on the value of all taxable gifts and the Assessing Officer erroneously adopted the Schedule of rates given in Schedule I to the Act.”
“Thus the valuation of the property was done in terms of the provisions of the Gift Tax Act and in the process of doing such evaluation, the Assessing Officer relied upon the registered sale deeds and the stamp duty which was paid on such instruments though the apparent sale consideration reflected in those documents were less. In any event, this being a question of fact, the burden was on the assessee to prove that what he received was only Rs.3 lakhs from the purchaser/partnership firm and not Rs.15,34,500/-. This aspect of the matter having not been established by the assessee, we find that the Tribunal rightly affirmed the orders passed by the authorities below. So far as the appeal with regard to the penalty is concerned, we find that adequate relief has been granted to the assessee by the Tribunal and we find that there is nothing to interfere with such order,” the Court said.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan AdFree. Follow us on Telegram for quick updates.
