SECTION 52 – TRANSFER FOR LESS THAN FAIR MARKET VALUE

  1. Whether sub-section (2) can be invoked in the cases of transfer of capital assets at the instance of Government or where consideration for such transfer  is fixed by the Government or Reserve Bank

I am directed to say that the Board has examined in consultation with the Ministry of Law the question whether the provisions of section 52(2) can be invoked in respect of transfer of capital assets at the instance of the Government or where the consideration for such transfer is determined or fixed by the Central Government or the Reserve Bank of India.  In cases where a capital asset is acquired by or under any law for the time being in force relating to the compulsory acquisition of property, then the amount finally paid or determined under that law shall be taken to be its fair market value on the date of its transfer.

Similarly, when any capital asset is transferred to the Government or to any other person and the consideration for such transfer is determined or fixed by the Central Government or the Reserve Bank of India, then such consideration shall be taken to be the fair market value of the asset on the date of its transfer.  In either case, if the party contends that the amount so determined or fixed is not the fair market value, then the amount claimed by the party on account of the said asset shall be taken to be its fair market value until a final decision is arrived at as to the amount actually payable to the owner of the property by or under the law or the agreement of transfer.

Circular : No. 132 [F. No. 207/11/74-IT(A-II)], dated 26-3-1974.

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