Delhi HC reverses ITAT
order for AY 1999-2000, rejects substitution of market value as full value of
consideration for sale of shares by assessee (an individual) to its related
entity; Notes that AO had held that assessee backdated the sale transaction to
related entity (GIPL) to August 14, 1998 instead of actual date of sale of
September 30, 1998 and calculated long-term capital gains considering sale
consideration based on market price as on September 30, 1998 of Rs. 1,493 as
against actual sale price of Rs. 450; Notes that Sec. 52 which allowed such
substitution under certain circumstances was omitted from April 1, 1988 and
thus was not applicable to relevant AY; Rejects ITAT’s distinction of SC ruling
in K.P. Varghese case which states that difference between the consideration
actually received and market value of capital asset by itself would not justify
invoking Sec 52 and understatement of sales consideration must be shown, merely
because transaction "was not at arm’s length”; Further, holds that Revenue
could have taxed the given transaction as gift under the Gift Tax Act, 1958
which was applicable then, remarks that, “Thus, what was apparent and simple to
adopt and tax the under-statement of fair market value, was strangely ignored
and allowed to lapse. Addition was made, indirectly invoking Section 52, which
provision was not in the Statute, and which provision as per judicial
pronouncement in K. P. Vergese (supra) could not have been invoked.”:HC
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