RedGage

Section 48 of income tax act is about computation of capital gains.Full value of consideration: - the act has not defined the phrase full value of consideration and therefore it has to be understood in commercial senses according to the prevalent usage. Following points may be noted in this connection.Sale price bargained by party, is the full value of consideration: - the expression full value of consideration can not be constructed as the market value. It refers to the price bargained by the parties to the sale. The expression full value means the whole price, bargained by the parties without any deduction whatsoever and it cannot refer to the adequacy or inadequacy of the price bargained for [CIT vs. George Henderson & co. ltd. (1976) 66 ITR (SC)].Solatium forms part of the full value of consideration: - solatium is an extra payment provided for under the land acquisition act for the compulsory nature of the acquisition. Solatium paid for the transfer for the undertaking is the part of the sale consideration and forms part of the capital gains [karvalves Ltd. Vs. CIT (1971) 80 ITR 711 (Guj2.)]