TAXATION: Full value vs fair market value.

from BUSINESS LINE, March 21, 2009 The income-tax department has been waging a running battle to detect undervaluation of properties with a view to evade or avoid payment of legitimate capital gains tax. The transfer price of the property is generally understated both with a view to avoid capital gains tax and to reduce the payment of stamp duty.

In 1964, Section 52 was introduced in the I-T Act, 1961 to tax deemed capital gain if the fair market value of the capital asset exceeded the full value consideration declared in the transfer deed.

The Supreme Court frowned on the subjective element involved in determining fair market value and practically struck down …