4. GIFTS TO INCLUDE CERTAIN TRANSFERS. –
1(1) For the purposes of this Act, –
(a) where property is transferred otherwise than for adequate consideration, the amount by which the 2value of the property as on the date of the transfer and determined in the manner laid down in Schedule II exceeds the value of the consideration shall be deemed to be a gift made by the transferor :
3Provided that nothing contained in this clause shall apply in any case where the property is transferred to the Government or where the value of the consideration for the transfer is determined or approved by the Central Government or the Reserve Bank of India;
(b) where property is transferred for a consideration which, having regard to the circumstances of the case, has not passed or is not intended to pass either in full or in part from the transferee to the transferor, the amount of the consideration which has not passed or is not intended to pass shall be deemed to be a gift made by the transferor;
(c) 38 where there is a release, discharge, surrender, forfeiture or abandonment of any debt, contract or other actionable claim or of any interest in property by any person, the value of the release, discharge, surrender, forfeiture or abandonment to the extent to which it has not been found to the satisfaction of the 4Assessing Officer to have been bona fide, shall be deemed to be a gift made by the person, responsible for the release, discharge, surrender, forfeiture or abandonment;
(d) where a person absolutely entitled to property causes or has caused the same to be vested in whatever manner in himself and any other person jointly without adequate consideration and such other person makes an appropriation from or out of the said property, the amount of the appropriation used for the benefit of the person making the appropriation or for the benefit of any other person shall be deemed to be a gift made in his favour by the person who causes or has caused the property to be so vested;
5(e) where a person who has an interest in property as a tenant for a term or for life or a remainderman surrenders or relinquishes his interest in the property or otherwise allows his interest to be terminated without consideration or for a consideration which is not adequate, the value of the interest so surrendered, relinquished or allowed to be terminated or, as the case may be, the amount by which such value exceeds the consideration received, shall be deemed to be a gift made by such person.
6(2) where in the case of an individual being a member of a Hindu undivided family, any property having been the separate property of the individual has been converted by the individual into property belonging to the family through the act of impressing such separate property with the character of property belonging to the family or throwing it into the common stock of the family (such property being hereafter in this sub-section referred to as the converted property), then, notwithstanding anything contained in any other provision of this Act or any other law for the time being in force, for the purpose of computation of the taxable gifts made by the individual, the individual shall be deemed to have made a gift of so much of the converted property as the members of the Hindu undivided family other than such individual would be entitled to, if a partition of the converted property had taken place immediately after such conversion.
(i) If the difference between the consideration for sale and the fair market value of the land was nominal, there was no deemed gift in the transaction of sale; (1992) 198 ITR 581 (DB) (All).
(ii) A minor was admitted to benefits of partnership. Subsequently, reconstitution of the firm took place excluding minor. Held, in the absence of an agreement, share of minor in assets or in goodwill cannot be assumed and charged to Gift Tax; 1994 Tax LR 240 (DB) (Gau).
(iii) Provisions of this section are not applicable in respect of some future release, discharge, surrender, forfeiture or abandonment of any debt, contract or other actionable claim of any interest in the property by any person being a retiring partner; (1994) 119 Taxman 231 (DB) (Raj).
(iv) Capital contributed by minor introduced to the benefit of partnership thereby resulting in redistribution of capital as per profit sharing proportion should be treated as consideration for gift of interest surrendered in favour of the minor; 1992 Tax LR 488 (DB) (Ker).
1. Section 4 re-numbered as sub-section (1) thereof by Act 32 of 1971, sec. 37 (b) (w.e.f. 1-4-1972).
2. Subs. by Act 49 of 1991, sec. 84, for “market value of the property at the date of the transfer”. (w.e.f. 1-4-1992).
3. Ins. by Act 25 of 1975, sec. 29 (w.r.e.f. 1-4-1974).
4. Subs. by Act 4 of 1988, sec. 161, for “Gift Tax Officer” (w.e.f. 1-4-1988).
5. Ins. by Act 44 of 1980, sec. 42 (b) (w.e.f. 1-4-1980).
6. Ins. by Act 32 of 1971, sec. 37 (b) (w.e.f. 1-4-1972).