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Case law › Circulars › 1974 › Circular No. 136
CBDT circular 24 May 1974

Circular No. 136

1441. Whether clause (a) of sub-section (1) should be invoked in cases where consideration for transfer of property is determined/approved by Central Government/Reserve Bank

What this is

Circular No. 136 was issued by the Central Board of Direct Taxes on 24 May 1974. Its subject is 1441. Whether clause (a) of sub-section (1) should be invoked in cases where consideration for transfer of property is determined/approved by Central Government/Reserve Bank.

What it does

Decides how section 4(1)(a) of the Gift-tax Act is to be applied where the price is not the parties' own. Where property is transferred and the consideration is determined, fixed or approved by the Central Government or the Reserve Bank of India, that consideration is to be taken as the market value of the property on the date of transfer, so no deemed gift arises from the difference. If the transferor contends that the market value is higher than the amount so fixed, then the amount he claims for the property is to be taken as the market value until a final decision is reached on what is actually payable to him by the transferee.

Why it was issued

The Board examined whether section 4(1)(a), which treats a transfer for inadequate consideration as a gift of the shortfall, should be invoked where the consideration was itself set or approved by the Government or the Reserve Bank.

Who it reaches

The provisions it speaks to

Left, the provision of the Income-tax Act, 1961 as the instrument itself names it. Right, the section of the Income-tax Act, 2025 that the department’s own concordance maps it to — which is where the same ground is now covered.
Under the 1961 ActNow
s.4s.4

The instrument, as the Board published it

The words below are the department’s own, reproduced from its published text. Where the department’s copy carried a publisher’s notes after the instrument, those are not reproduced.

1441. Whether clause (a) of sub-section (1) should be invoked in cases where consideration for transfer of property is determined/approved by Central Government/Reserve Bank
The Board have examined the question whether the provisions of section 4(1)( a) should be invoked in cases where the consideration for the transfer of property is determined, fixed or approved by the Central Government or the Reserve Bank of India. It has been decided that when any property is transferred and the consideration for such transfer is determined, fixed or approved by the Central Government or the Reserve Bank of India, then such consideration shall be taken to be the market value of the property at the date of its transfer. If the transferor contends that the market value is more than the amount so determined, fixed or approved, then the amount claimed by the transferor on account of the said property shall be taken to be its market value until a final decision is arrived at as to the amount actually payable to the transferor by the transferee.
Circular : No. 136 [F. No. 331/1/74-GT], dated 24-5-1975.

What to watch

Where you meet it

A deemed gift addition under section 4(1)(a) where property was transferred at a Government or Reserve Bank approved price.

On the same provision

Other instruments in this library that name the same provision of the 1961 Act. They are not necessarily still operative, and a later one may have replaced an earlier one without saying so.

← Circular No. 137  ·  Circular No. 135 →

A circular binds the department, not you and not a court. The Board issues a circular to its own officers. An assessee may hold the department to a circular that helps him; the department cannot hold an assessee to one that hurts him, and the Tribunal and the courts decide the law for themselves.

Source: the Income Tax Department’s own published text — its page for this instrument.