CA DISA
7150 Points
Joined March 2008
Adequate consideration and inadequate consideration can be understood by a very simple example. Suppose. if you are going to buy some property having a fair market value of Rs.10 Lacs, but you are either paying 15 lacs for the same just to increase your cost of purchase or you are paying Rs. 6 lacs just to give benefit to the seller by reducing his sale consideration and hence the capital gains. In this case it shall be assumed that you are paying inadequate consideration. It can be both ways, either for yourself, or for someone known. You need to prove the adequacy of the transaction.