Can Someone tell me what is the meaning of adequate consideration?
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Income Tax
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'Adequate consideration' means the consideration for which an unrelated seller will sell a thing to an unrelated buyer. That means the price at which two persons will exchange things between each other when they r not related.
It means one thing will be exchanged by exactly or around the same value of another thing.
Adequate consideration r generally found lacking when things r exchanged or relinquished to persons like spouse, or sons wife or son, daughter or any body closely related to the person in question eg. director of the co. or his relative. or partner of the firm in which director is partner. !!!!!!!!!!!!!!
Adequate Consideration means that the Amount should be at an Arms Length. It need be a specified amount, but should match in some way with the Market...
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