Rama Jois, J.This Income Tax reference arises out of proceedings for the levy of capital gains tax on the assesses who is an individual. Pursuant to the direction given by this court in C.P. No. 40 of 1976, dated November 23, 1976, the following two questions of law have been referred for the opinion of this court by the Income Tax Appellate Tribunal, Bangalore Bench :

"(i) Whether, on the facts and in the circumstances of the case, the Tribunal is right in its view that the provisions of section 52(2) of the Income Tax Act, 1961, are attracted to the instant case

(ii) Whether, on the facts and in the circumstances of case, the determination of the value of the properties in question is right in law "

2. The assesses had purchased a plot of 25,003 sq. yards. in the city of Bangalore for a sum of Rs. 3,55,000 from Indian Radiators Ltd., on August 25, 1959. In the year 1965-66, the assesses sold the property to three persons. The particulars relating to the sale, the date of sale as also the market value of the property as on March 31, 1964, according to the valuation made by the valuers, in connection with the assessment to wealth-tax are as follows :

3. The ITO found that the sale price of items 1 and 3 above was less than the market value even as on March 31, 1964. He called upon the assesses to show cause as to why the difference between the price for items 1 and 3 sold and the market value of the property as on the date of sale should not be subjected to capital gains tax under s. 45 of the Income Tax Act, 1961 (hereinafter referred to as "the Act"). The assesses objected to the proposal. He pointed out that though items 1 and 3 had been sold for a lower price, in the aggregate the assesses had made sufficient gains if the sale price of the second item was also taken into account. He pointed out that the total market value of all the three items as on March 31, 1964, was Rs. 6,04,000 whereas the total sale value of the three items came to Rs. 6,05,000. The ITO noticed that item 1 measuring 6,522 sq. yds. had been given on perpetual lease to the Canara Public Conveyance Pvt. Ltd., (hereinafter referred to as "the C.P.C.(P.) Ltd.,") on a rental of Rs. 600 per month and subsequently the property was sold for a sum of Rs. 90,000 only. He noticed that the assesses was the managing director of the C.P.C.(P.) Ltd., and was associated with it right from its inception and, therefore, there was direct connection between the assesses and the C.P.C.(P.) Ltd. The ITO ascertained the market value of the property by capitalising the rental income and arrived at the value of Rs. 1,12,000 and this was also the value of the plot which had been fixed by the valuers as on March 31, 1964, for purposes of wealth-tax. The ITO, therefore, considered that as the market value of the property as on the date of sale of the first item to C.P.C.(P.) Ltd., was Rs. 1,12,000 and it was sold only for Rs. 90,000 in view of the connection between the assesses and the C.P.C.(P.) Ltd., and also because the difference between the two figures exceeded 15 per cent. both the sub-section of s. 52 were attracted. However, there was no finding that the assesses had received any money as consideration for the sale of the property from the C.P.C.(P.) Ltd., over and above the amount mentioned in the sale deed. As regards the third item, namely, the plot sold to Aroor Ram Mohan Rao & others of Aroor family, the ITO after ascertaining the sale statistics of the sites in the vicinity as also the evidence given by an estate agent came to the conclusion that the market value of the site as on the date of sale, i.e., November 15, 1965, was Rs. 30 per sq. yd. and on this basis came to the conclusion that in view of s. 52(2) of the Act the sale consideration of the site sold to the Aroor family must be taken to be Rs. 3,35,000 as against Rs. 1,40,000 shown in the sale deed. In this case also, the ITO did not have any evidence and consequently did not record any finding that any money over and above the capital consideration mentioned in the sale deed had been received by the assesses. However, he fixed capital gains liability on the basis of the difference of the amount between the price mentioned in the sale deed and the market value of the property as ascertained by him as on the date of sale relaying on sub-s. (2) of s. 52 of the Act.

4. The matter was taken up in appeal before the AAC. The appellate authority accepted the plea of the assesses that there was no connection between the assesses and the C.P.C.(P.) Ltd., having regard to the fact that the C.P.C.(P.) Ltd., was a limited company and, therefore, s. 52(1) of the Act was not attracted. However, he came to the conclusion that as regards the first item of property, its sale for Rs. 90,000 was for a value lesser than the market value of the property and as the difference was more than 15% the sale consideration for purposes of capital gains had to be computed on the basis of the market value of the property on the date of sale in view of sub-s. (2) of s. 52 of the Act. As regards the third item, the appellate authority observed that there had been an upward trend in the price of landed property since 1954 in the City of Bangalore owing to the influx of people from different parts of the country, and, therefore, the market value as fixed by the ITO was sound. He rejected the appeal. Aggrieved by the said order, the assesses preferred second appeal before the Income Tax Appellate Tribunal. The Tribunal affirmed the orders of the assessing authority and the appellate authority with a slight modification by reducing the market value of the land sold to Aroor family from Rs. 30 per sq. yd. to Rs. 25 per sq. yd. Before the Tribunal, the assesses relied on the decision of this court in the case of Addl. Additional Commissioner of Income Tax, Mysore Vs. M. Ranga Pai and Others, in support of his connection that in the absence of evidence of under-statement of the valuation, the provision of sub-s. (2) of s. 52 would not be attracted. The Tribunal, however, distinguished the said decision on the ground that the decision in Ranga Pais case depended on the peculiar facts of that case. After the decision of the Tribunal, as the request of the assesses for referring the questions mentioned earlier to this court was rejected by the Tribunal, the assesses approached this court by means of a civil petition and pursuant to the order of this court, the question have been referred for the opinion of this court.

5. Before considering the rival contentions urged for the parties, it is convenient to refer to the relevant provisions of the Act. Under s. 14E of the Act, capital gains are treated as a source of income liable to tax. Section 2(24) defines income as including capital gains chargeable to tax under s. 45 of the Act. Section 45 is the charging section as far as capital gains are concerned. It provides that any profits or gains arising from the transfer of a capital asset effected in the previous year shall be chargeable to Income Tax under the head "Capital gains" and shall be deemed to be the income of the previous year in which the transfer took place. Certain exemptions are provided under ss. 53, 54, 54B and 54D of the Act with which we are not concerned. Section 48 of the Act is the section which provides for the mode of computing capital gains. It provides that the income chargeable under the head "Capital gains" shall be computed by deducting from the full value of the consideration received or accruing as a result of the transfer of the capital asset - (i) expenditure incurred wholly and exclusively in connection with such transfer; and (ii) the cost of acquisition of the capital asset and the cost of any improvement thereto. Sub-sections (1) and (2) of s. 52 of the Act read as follows :

"52. Consideration for transfer in cases of under-statement. - (1) Where the person who acquires a capital asset from an assesses is directly or indirectly connected with the assesses and the Income Tax Officer has reason to believe that the transfer was effected with the object of avoidance or reduction of the liability of the assesses u/s 45, the full value of the consideration for the transfer shall, with the previous approval of the Inspecting Assistant Commissioner, be taken to be the fair market value of the capital asset on the date of the transfer.

(2) Without prejudice to the provisions of sub-section (1), if in the opinion of the Income Tax Officer the fair market value of a capital asset transferred by an assesses as on the date of the transfer exceeds the full value of the consideration declared by the assesses in respect of the transfer of such capital asset by an amount of not less than fifteen per cent. of the value so declared, the full value of the consideration for such capital asset shall, with the previous approval of the Inspecting Assistant Commissioner, be taken to be its fair market value on the date of its transfer."

6. Sub-section (1) of s. 52 was in existence as s. 52 at the time when the Act was enacted, there being no second sub-section. Sub-section (2) to s. 52 was introduced by the Finance Act, 1964, with effect from April 1, 1964. There is not much controversy about the interpretation of sub-s. (1) of s. 52 in view of its clear wordings. The section was also interpreted by the Supreme Court in the case of I.C.I. (India) Private Ltd. Vs. The Commissioner of Income Tax, West Bengal, The Supreme Court observed that the necessary ingredients of s. 52 (which is now sub-s. (1) of s. 52) are as follows (p. 713) :

"(i) there should be a direct or indirect connection between the person who acquires a capital asset and the assesses;

(ii) the Income Tax Officer should have reason to believe that the transfer was effected with the object of avoidance or reduction of the liability of the assesses to capital gains;

(iii) if the first two conditions are satisfied then the full value of consideration for the transfer can be taken to be the fair market value of the capital asset on the date of the transfer."

7. In the present case, however, the question referred for our opinion depends on the interpretation of sub-s. (2) of s. 52. It is argued for the revenue by its learned counsel, Sri S. R. Rajasekhara Murthy, that in view of the wording of the second sub-section of s. 52 the mere existence of a difference of 15% or more between the market value of the property as ascertained by the ITO as on the date of the sale and the actual price incorporated in the sale deed, is sufficient to incur the liability for payment of capital gains tax on such difference of amount and that the existence of such difference itself is conclusive proof of the fact that there has been understatement of valuation, i.e., a sum lower than the one actually received has been mentioned in the sale deed. Per contra Sri Sarangan, learned counsel for the assesses, argued that the condition imposed in sub-s. (1), namely, the existence of material to hold that there has been an under-statement of consideration with the intention to avoid tax on capital gains is equally applicable to sub-s. (2) of s. 52 of the Act and the only difference between the two sub-section was, while sub-s. (1) is attracted only in cases where there has been direct or indirect connection between the vendor and the vendee, sub-s. (2) is attracted in all cases of sales where the difference between the market value of the property as on the date of sale and the consideration for sale mentioned in the sale deed is 15% or more irrespective of the fact whether there was any direct or indirect connection between the vendor and the vendee. He submitted that the answer to the question was concluded by the decision of this court in the case of Additional Commissioner of Income Tax, Mysore Vs. M. Ranga Pai and Others,

8. Learned counsel for the revenue, however, argued that the case of Ranga Pai was decided on the peculiar facts of the said case and, therefore, the said decision cannot be taken as a precedent. He further argued that the reliance placed on the marginal note to interpret the provisions of sub-s. (2) of s. 52, the language of which is clear and unambiguous, was clearly impermissible, in view of the decision of the Supreme Court in The Western India Theatres Ltd. Vs. Municipal Corporation of The City of Poona, and in Board of Muslim Wakfs, Rajasthan Vs. Radha Kishan and Others,

9. We are unable to agree with the learned counsel for the revenue that the case of Additional Commissioner of Income Tax, Mysore Vs. M. Ranga Pai and Others, is distinguishable and should be confined to the facts of that case. The learned counsel for the assesses is right in his submission that the decision in Ranga Pais case fully covers the question of interpretation of sub-s. (2) of s. 52 arising for consideration in this case. In the said case, Venkatesha Pai, the father of Ranga Pai had purchased a house property situated in the City of Mangalore for a sum Rs. 25,000 on March 24, 1950, from Manel Raghunatha Naik, who sold it when he was in financial difficulties. But, according to Ranga Pai, there was an oral agreement between the vendor and the vendee that the latter would execute a deed of conveyance of the same property for the same amount in favour of the vendor at any time when the vendor was in a position to pay the amount of Rs. 25,000. It so happened that the father of Ranga Pai as also the vendor dies and thereafter in the year 1963, M. Ranga Pai reconveyed the property to Manel Mukunda Naik, son of Manel Raghunath Naik, for the same amount of Rs. 25,000 respecting the agreement entered into by his father. The ITO was of the view that the sale of the property was for an inadequate consideration and, therefore, subjected the difference of the amount between the market value of the property in the year 1963 and Rs. 25,000 for which consideration reconveyance deed was executed to gift-tax under the provisions of the G.T. Act, 1958. Thereafter, the ITO under a direction issued by the Commissioner under s. 263 of the Act, subjected the difference of amount between the market price of the property as on the date of reconveyance and the sum of Rs. 25,000 for which it was reconveyed, which exceeded 15% to capital gains tax under sub-s. (2) of s. 52 of the Act. When the matter reached this court, it was contended for the revenue that even though the property had been actually reconveyed for Rs. 25,000 only and no amount over and above the sale consideration was received by the assesses, the difference was liable to capital gains in view of sub-s. (2) of s. 52 of the Act. This court interpreted sub-s. (2) of s. 52 of the Act and held that the evidence regarding understatement as well as avoidance of tax, which was a condition precedent for invoking sub-s. (1) of s. 52 was equally applicable to sub-s. (2) of s. 52 of the Act, even though there was no specific condition incorporated in s. 52 as the object of s. 52 as revealed from the marginal note was to deal only with cases of understatement and observed that the difference between the two sub-sections was as follows :

(i) In order to attract sub-s. (1) there should be indirect or direct relation between the vendor and the vendee, whereas for invoking sub-s. (2) no such relationship is necessary.

(ii) In order to invoke sub-s. (2) of s. 52 of the Act, the difference between the market value of the property as on the date of sale and the consideration mentioned in the sale deed should be 15% or more whereas such a condition was not necessary to invoke sub-s. (1).

10. In that view of the matter, the court held that as on the facts of Additional Commissioner of Income Tax, Mysore Vs. M. Ranga Pai and Others, , there was no evidence of making an understatement of the valuation in the sale deed, sub-s. (2) of s. 52 was not applicable. Therefore, it is clear that the point arising for consideration in this reference is concluded by the decision in Ranga Pais case.

11. It is true that in interpreting sub-s. (2) of s. 52 of the Act, reliance was placed by this court on the marginal note of the section. According to the learned counsel for the revenue, such a course was not permissible in view of the decision of the Supreme Court in The Western India Theatres Ltd. Vs. Municipal Corporation of The City of Poona, and the Board of Muslim Wakfs, Rajasthan Vs. Radha Kishan and Others, It is true that the marginal note cannot be relied on for purposes of interpreting a section in a manner so as to change its meaning. But the heading or marginal not to a section is regarded as preamble to the concerned section and though it cannot control the plain words of the section, it may explain ambiguous words and if there is any doubt in the interpretation of the words of the section, the heading certainly helps the court to resolve that doubt as observed by the Supreme Court in Bhinka and Others Vs. Charan Singh, . It is this purpose that the marginal note was used in Additional Commissioner of Income Tax, Mysore Vs. M. Ranga Pai and Others, . It should, however, be pointed out that this court had also placed reliance on the circular issued by the Central Board of Direct Taxes in exercise of its power under s. 119 of the Act which is binding on all the subordinate authorities : See Navnitlal C. Javeri Vs. K.K. Sen, Appellate Assistant Commissioner of Income Tax, D Range, Bombay, and Ellerman Lines Ltd. Vs. Commissioner of Income Tax, West Bengal, Calcutta, and it was held that the said circular gave the indication that sub-s. (2) of s. 52 was not intended to cover bona fide transactions. This court also referred to the statement of the Finance Minister while moving the Finance Bill of 1964 in which also he assured that sub-s. (2) of s. 52 was not intended to cover bona fide transfers, but did not rely on it on the ground that it was not a material relevant for interpreting the provision. But as held by the Supreme Court in The Sole Trustee, Lok Shikshana Trust Vs. The Commissioner of Income Tax, Mysore, recourse can be had to the speech by the mover of the Bill in Parliament for ascertaining the real meaning of a statutory provision in case of doubt. This court also observed that the acceptance of the interpretation suggested for the revenue would render s. 47(iii) of the Act which excludes gifts from the purview of s. 45 otiose. The decision in Additional Commissioner of Income Tax, Mysore Vs. M. Ranga Pai and Others, was rendered on January 2, 1975. It is not disputed that the said decision is not taken in appeal and is being followed by the department all these years. In Ranga Pais case, this court agreed with the view taken by Isaac J. In K.P. Varghese Vs. Income Tax Officer, B-Ward and Others, distinguishing the majority view taken to the contrary in appeal against the said decision in Income Tax Officer, B-Ward and Another Vs. K.P. Varghese, Subsequently, the view taken by this court in Ranga Pais case had been agreed to by the Madras High Court in addl. ADDITIONAL COMMISSIONER OF Income Tax, MADRAS Vs. P. S. KUPPUSWAMY AND OTHERS., and by the Andhra Pradesh High Court in Addl. Addl. Commissioner of Income Tax Vs. S.R.Y. Ankineedu Prasad, and by the Madhya Pradesh High Court in CIT v. Smt. Sethani Godwaribai (see p. 349 supra). However, in view of the submission made for the revenue, we proceed to have a second look at the provisions of s. 52.

12. Before proceeding further it is necessary to state that the department is not in a position to contend that the assesses had received any money over and above the consideration mentioned in the two sale deeds. Learned counsel for the revenue, however, made a feeble attempt to make out that there has been a finding by the Tribunal about the understatement of valuation. But on going through the order of the Tribunal, we are satisfied that the submission made by the learned counsel for the revenue is based only on the difference between the market value and the sale consideration mentioned in the sale deed and there is no iota of evidence to the effect that the assesses had received any money over and above the amounts mentioned in the sale deeds. There is no finding by any one of the authorities that the assesses had received any amount beyond the consideration mentioned in the two sale deeds. Therefore, we proceed to consider the question of law on the basis that the assesses had received only the amount mentioned in the sale deeds and that the market value fixed by the authorities was also correct and that the difference between the two figures exceeds 15 per cent.

13. As stated earlier, as far as s. 52(1) is concerned, it gets attracted only when the vendor and the vendee are directly or indirectly related to each other and there has been an understatement of valuation in the sale deed with the intention of avoiding capital gains tax. Coming to the wording of sub-s. (2), at first sight it appears that the only condition necessary to incur the liability to pay capital gains on effecting sale of a capital asset is that the difference between the value mentioned in the sale deed and the fair market value is not less than 15 per cent. even though the seller has received only the amount mentioned in the sale deed. This means that the moment the ITO ascertains the market value of a capital asset sold by its owner and finds that the difference between the market value of the sale price mentioned in the sale deed is 15 per cent. or more, it must be treated as capital gains in addition to the gains calculated on the basis of the price mentioned in the sale deed, even though in fact and in truth the vendor has sold only for the price mentioned in the sale deed. It is difficult to accede to the submission that the legislation which is intended to levy tax on capital gains received or accrued to a person has incorporated a provision to tax even if there is no gain either received or accrued, just because the owner has sold the property for a lower price. Circumstances are not wanting where persons either on account of urgent need for various reasons including financial difficulties or on account of ignorance or having been misled by some one, might sell their property for a price lesser than the market value, the difference being more than 15 per cent. It is also natural that when a person on account of his own urgency wants to sell the property immediately he is likely to get a lower offer. Similarly, it is not unnatural that a person though not willing to gift away his property may be willing to sell his property for a lesser value out of his affection or regard for a person or his noble occupation or for a laudable purpose and such value may be lesser by more than 15 per cent. of the fair market value. The question for consideration is, is the provision intended to make such persons liable to pay the tax for capital gains for the act of selling the property for a lesser value under unavoidable circumstances or with good intention as indicated above and to subject them to additional burden Obviously not. According to sub-s. (2) of s. 52, if the fair market value of the capital asset transferred by an assesses, as on the date of transfer exceeds the full value of the consideration declared by the assesses in respect of such transfer by an amount of not less than 15 per cent. of the value so declared the full value of the consideration for such capital asset shall be taken to be its fair market value as on the date of transfer. The words "consideration declared by the assesses" and the words "value so declared" used in sub-s. (2) and in particular the word "declared" at both places is significant. It presupposes that the actual value received is the "undeclared value" which is something different and higher than the value declared in the sale deed. Any doubt in this regard is removed by the marginal note to the section which reads "consideration for transfer in cases of understatement", because it is only is a case where the vendor having received a higher amount as consideration for the transfer of a capital asset makes an understatement of consideration in the sale deed obviously to avoid capital gains tax on the difference of amount and to return it as unaccounted money, the amount mentioned in the sale deed can be regarded as the declared value and the amount actually received as the undeclared value. In a case where the consideration actually recorded in the sale deed was also the amount actually received by the vendor, merely because the fair market value exceeds by 15 per cent. of the actual sale consideration, it cannot be said that it was a case of understatement or that the consideration declared is different from the undeclared consideration which is non-existent. Therefore, in our view the word "declared" used in s. 52(2) of the Act is significant which leads to the construction of that provision to the effect that it attracts a case in which it is established that a vendor has declared a lower consideration in the deed transferring his capital asset having received a higher amount as consideration. This construction fully receives support from the provisions of s. 47(iii) of the Act, which reads :

"47. Nothing contained in section 45 shall apply to the following transfers :-.......

(iii) any transfer of a capital asset under a gift or will or an irrevocable trust."

14. The meaning of the word "gift" as given in Websters Third New International Dictionary, at page 956, is "a voluntary transfer of real or personal property without any consideration or without any valuable consideration." The definition of gift given in s. 122 of the Transfer of Property Act is also identical. If the word "gift" was intended to be used in s. 47(iii) of the Act in the above sense then there was no necessity to use it at all, i.e., there was no necessity to except a "gift" from the provisions of s. 45 as that section speaks of profit or gain arising out of the transfer of a capital asset and, therefore, the question of taking a "gift" out of s. 45 would not arise. Therefore, in order to make the provision meaningful, the word "gift" used in s. 47(iii) of the Act should be given the same meaning as is given to that word in the G.T. Act, 1958 (18 of 1958), which given an extended meaning by including a transfer of property for inadequate consideration also within its meaning. The word "gift" is defined in s. 2(xii) of that Act which has to be read with s. 4 of that Act. The definition and relevant part of s. 4(1) of that Act read as follows :

"2. In this Act, unless the context otherwise requires, -.......

(xii) gift means the transfer by one person to another of any existing movable or immovable property made voluntarily and without consideration in money or moneys worth, and includes the transfer or conversion of any property referred to in section 4, deemed to be a gift under that section.

4. (1) For the purposes of this Act, -

(a) Where a property is transferred otherwise than for adequate consideration, the amount by which the market value of the property at the date of the transfer exceeds the value of the consideration shall be deemed to be a gift made by the transferor :..."

15. If this definition is invoked to understand the meaning of the word "gift" used in s. 47(iii) of the Act, s. 45 and consequently all the other provisions pertaining to capital gains incorporated in the I.T. Act including s. 52 would not at all be applicable to cases of transfer of capital assets for inadequate consideration. The objection of the learned counsel for the revenue, however, was that the word "gift" has been defined in the G.T. Act only for purposes of that Act and the said definition cannot be invoked for understanding the said word used in the I.T. Act. We are unable to agree with this submission for two reasons :

(1) It is a well recognized rule of construction that it is permissible to give meaning to a word used in a later enactment the same meaning as given to it in an earlier enactment if both the Acts are in pari materia.

(2) If the word "gift" under s. 47(iii) of the Act is not given the meaning as used in the G.T. Act, the use of that word in s. 47(iii) of the Act by the Legislature would be rendered meaningless and otiose. This is not a permissible rule of construction. An effort should always be made so as to give meaning to all parts of the provisions and to make the whole of it effective and operative. (See : Siraj-Ul-Haq Khan v. Sunni Central Board of Wakf).

16. As regard the rule construction regarding words used in a later enactment by resorting to the provisions in an earlier enactment, Craies on Statute Law (7th Edn.), at pages 134 and 141, states :

"(1) Statutes in pari materia

Where Acts of Parliament are in pari materia, that is to say, are so far related as to form a system or code of legislation the rule as laid down by the twelve judges in Palmers case [1785] 1 L C.C. 4. 355 is that such Acts are to be taken together as forming one system, and as interpreting and enforcing each other. In the American case of United Society v. Eagle Bank [1829] 7 CoM. 457, Hosmer J., said : Statutes are in pari material which relate to the same person or thing, or to the same class of persons or things. The word par must not be confounded with the word similes. It is used in opposition to it, as in the expression magis pares sunt quam similes, intimating not likeness merely, but identity. It is a phrase applicable to the public statutes or general laws made at different times and in reference to the same subject.

As Knight Bruce L.J. said in Ex. P. Copeland [1852] 22 L.J. B 17 upon a question of construction arising upon a subsequent statute on the same branch of the law, it is perfectly legitimate to use the former Act, though repealed. For this, continued he, I have the authority of Lord Mansfield, who in R. v. Loxdale [1758] 1 Burr. 445 thus lays down the rule, "Where there are different statutes in pari materia, though made at different times, or even expired and not referring to each other, they shall be taken and construed together as one system and as explanatory of each other" ...

17. PRESUMPTION FROM USE OF SAME LANGUAGE IN LATER ACT. - It has been held that, where the legislature has given to words a statutory definition in one statute, and has used the same words in a similar connection in a later statute dealing with the same subject-matter, it may be presumed, in the absence of any context indicating a contrary intention, that the same meaning attaches to the words in the later as is given to them in the earlier statute."

18. Principles on the same lines are also set out in Maxwell on the Interpretation of Statutes, 12th Edn., pp. 66 and 68-69 :

"Light may be thrown on the meaning of a phrase in a statute by reference to a specific phrase in an earlier statute dealing with the same subject-matter."

"The same words or phrases, when used in Acts dealing with the same subject-matter, often bear the same meaning. So Lord Parker C.J. has said that it is a fair inference that agricultural land means the same thing in the Agriculture Act, 1947, the Agricultural Holdings Act, 1948, and even the Vehicles (Excise) Act, 1949; Cross J., has said that it would be very astonishing if premises meant different things in the Landlord and Tenant Acts of 1927 and 1954; and Lord Dilhorne L.C. found it inconceivable that Parliament intended that a different interpretation should be given to the words "obtained credit" in the Bankruptcy Act [1914] from that given to the same words in the Debtors Act, 1869...."

19. In Fendoch Investment Trust Co., v. IRC [1945] 2 All ER 140 (HL), Lord Simonds (at. P. 144) sounded a note of warning (more recently echoed by Harman L.J.) in connection with the use of statutes in pari materia when construing a tax statute. "I do not doubt that in construing the latest of a series of Acts dealing with a specific subject-matter, particularly where all such Acts are to be red as one, treat weight should be attached to any scheme which can be seen in clear outline and amendments in later Acts should if possible be construed consistently with that scheme. But this is a principle which can be seen in clear outline and amendments in later Acts should if possible be construed consistently with that scheme. But this is a principle which can easily be pressed too far in the consideration of a body of legislation.... in which, if any prevailing motive can be found, it is in the attempt, as each loophole for escape from taxation is discovered, to close it as firmly as possible."

20. The Supreme Court has also observed in the case of Board of Muslim Wakfs, Rajasthan Vs. Radha Kishan and Others, , that interpretation of the provision of an enactment with reference to the provisions of another enactment is permissible when the two Acts are in pari materia. This principle was applied by this count in relying on the definition of "industry" defined in the Industrial Disputes Act to interpret the said word in the Trade Unions Act as it was not defined in the latter. (See Central Machine Tool Institute v. Asst. Labour Commissioner [1978] 53 FJR 194 : ILR 1979 Kar 484, From the principles set out above, it is clear that where two legislations are in pari materia in that they deal with the same subject-matter and are meant to enforce each other, it is permissible to assign the meaning given to a word in an earlier enactment, to the same word used in a later enactment. Bearing in mind the above principle, as also the word of caution given by Lord Simonds, regarding the application of the principle to taxing statutes, we consider its applicability to this case. The G.T. Act was enacted in the year 1958 and the I.T. Act was enacted in the year 1961 by Parliament. Both the enactments impose direct taxes and are administered by the same administrative agency, i.e., the I.T. Dept. or the CBDT. In particular, the provisions of the I.T. Act in so far as they relate to capital gains, and the provisions of the G.T. Act are enacted to impose taxes in the context of transfer of property, from one to another by sale or gift, respectively. In the case of transfer by sale, the provisions are intended to tax the gains calculated on the basis of the sale value minus the actual cost, cost of improvement and expenses incurred in connection with the sale transaction, whereas in the case of transfer by way of gift, the gift-tax is levied on the value of the property as on the date of gift, irrespective of the lesser value for which it was acquired. The Legislature gave an enlarged definition for the word "gift" in the G.T. Act so as to include every sale for inadequate consideration so as to prevent evasion of gift-tax by clothing a gift in the form of sale for a notional consideration. It is for the reason that every sale for inadequate consideration had been defined as a gift and the provisions of the G.T. Act were made applicable, the Legislature deliberately excepted the gifts from the provisions of s. 45, by s. 47(iii) of the Act. If the contention suggested for the revenue that every sale of capital asset for inadequate consideration also falls within the purview of s. 52(2) of the Act, if the fair market value as on the date of sale exceeds 15% of the consideration actually received is accepted, s. 47(iii) of the Act would be rendered meaningless, which is not a permissible rule of interpretation. On the other hand, by giving the word "gift" used in s. 47(iii) of the Act the same meaning as given in the G.T. Act, there would be complete harmony between s. 47 and s. 52 of the Act. Every sale for inadequate consideration falls within the meaning of the word "gift" and consequently it would attract the levy of gift-tax and be outside the purview of capital gains tax and every sale in which there is understatement of the value falls within the mischief of s. 52 of the Act and attracts capital gains tax and not the provisions of the G.T. Act. The provision would be complementary to, and enforcing, each other. Hence, we hold that the word "gift" used in s. 47(iii) of the Act should be given the same meaning as given to it in the earlier G.T. Act, and consequently neither s. 45 nor s. 52 of the Act are attracted to a case of the transfer of capital asset for inadequate consideration.

21. It is also pertinent to point out that the acceptance of the literal construction suggested for the revenue would lead to incongruous and absurd results as demonstrated by the following illustrations :

If the cost of acquisition of a capital asset is Rs. 50,000 and the vendor and vendee are strangers and the fair market value of the property as on the date of the sale as determined by the ITO is Rs. 1,00,000 :

(a) if it is found to have been sold for a fancy price of Rs. 1,20,000 which was paid by the purchaser owing to its special use for him and which price no other party would have paid and evidence is also available to that effect, but the consideration shown in the sale deed was Rs. 70,000, then applying s. 52(2) of the Act the sale consideration has to be taken only at Rs. 1,00,0000, i.e., less than the actual consideration received, for the computation of capital gains :

(b) if it is sold only for Rs. 90,000 and it is also proved, but the sale consideration shown in the sale deed is Rs. 70,000 then for purposes of computing capital gains, the sale value has to be taken at Rs. 1,00,000 only, i.e., Rs. 10,000 more than the actual amount received.

(c) if there is an agreement to sell the property shortly after the property is acquired for a sum of Rs. 60,000 and for one reason or the other, the vendor failed to execute the sale deed and consequently the purchaser filed a suit for specific performance and secured a decree for specific performance of the agreement, and consequently the sale deed is executed after a period of five years on which date the fair market value of the property is Rs. 1,00,000 even though the sale deed is executed for a sum of Rs. 60,000 pursuant to the decree of the civil court and only a sum of Rs. 60,000 was received by the seller he will have to pay capital gains tax on a sum of Rs. 40,000 not gained or received by him.

22. Learned counsel for revenue was not in a position to dispute that the consequence of acceptance of his construction of s. 52(2) of the Act would have the effect as indicated in the above illustrations. Therefore, in our opinion, sun-s. (2), like sub-s (1) of s. 52 of the Act, is inapplicable to sales for inadequate consideration.

23. Before concluding we consider it necessary to observe that s. 52 is not happily worded. Both sub-section say that under the conditions stated therein, the fair market value as on the date of transfer of capital asset shall be taken to be the full value of consideration. It stops there without indicating as to what purpose. It nowhere states that such a value should be deemed to be the consideration received for purposes of computation of capital gains under s. 48 and for the levy of capital gains tax under s. 45. The wording is not clear. Further, appropriately such a provision should have figured as a proviso to s. 48. In view of the interpretation placed by us on s. 52(2), it appears to us that the difference of 15 per cent. between the fair market value of the property and the sale consideration declared in the sale deed mentioned in sub-s. (2) of s. 52. of the Act as a ground for invoking the said provision only means that the existence of such a circumstance would furnish the clue and constitute the basis for the ITO to initiate proceedings for levy of capital gains tax on that basis and to make an investigation and enquiry and if on such investigation and enquiry there is evidence of the vendor having received any amount more than the amount mentioned in the sale deed, to levy capital gains tax on such amount. In our opinion, ultimately, the capital gains liability has to be fixed only if the value declared in the sale deed is proved to be lower than the undeclared value received or agreed to be received and to the extent of the value so received or agreed to be received or agreed to be received. To put it differently, a case which falls under sub-s. (2) of s. 52. of the Act is one in which there has been concealment of income, which would also attract the penal provisions contained in s. 271(1) of the Act and not the one in which transfer of capital asset was for inadequate consideration, which obviously means that there was no concealment of any income and, therefore, to which s. 271(1) of the Act is not attracted.

24. In the result, we reiterate the view taken by this court in Additional Commissioner of Income Tax, Mysore Vs. M. Ranga Pai and Others, and hold that sub-s. (2) of s. 52. of the Act applies to cases of understatement of valuation made in the sale deed, to wit, where there is in truth a capital gain, but in is concealed by declaring a lower price in the deed of transfer with an intention to make unaccounted gains and avoidance or reduction of capital gains tax, and not to cases of transfer for inadequate consideration, whatever be the reason, resulting in the avoidance of the receipt of capital gains itself.

25. For the aforesaid reasons, we answer the first question in the negative, i.e., against the revenue and in favour of the assesses. In view of our answer to the first question, we consider it unnecessary to answer the second question.