Rejects market value substitution as sales consideration for share-sale to related party

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