Since common points are involved, these appeals are being disposed of together. 2. question raised is that by virtue of section 7(1) o f Wealth-tax Act, 1957 ('the Act') legal fiction of real sale is created and once such legal fiction of sale is presumed it should be deemed that it results in capital gains and any notional capital gains tax arising thereunder should be allowed as deduction from value of property. above contention was rejected by AAC. It has been reiterated before us. It is urged that by invoking legal fiction injustice should not be done to party. 3. We have considered submissions of both parties. Section 7(1) does not create any fiction of real sale. It is only hypothetical sale for purpose of determining value of asset. In Ahmed G. H. Ariff v. CWT [1970] 76 ITR 471, Supreme Court held that use of words 'if sold in open market' in section 7(1) does not contemplate actual sale or actual state of market but only enjoins that it should be assumed that there is open market and property can be sold in such market and, on that basis, value has to be found out. It is hypothetical case which is contemplated. Thus, in our view fiction is created only for limited purpose of determining value of property. But this fiction cannot be carried beyond purpose for which it is created. By such fiction no capital gains tax arises. Under section 45 of Income-tax Act, 1961, liability for payment of capital gains tax arises from transfer of capital asset. Thus, there should be actual transfer and not notional transfer to attract levy of capital gains tax under section 45. Unless there is actual sale by transfer there is no liability to capital gains tax. Hence, notional capital gains tax cannot be allowed as deduction in determining value of property. In Kesoram Industries & Cotton Mills Ltd. v. CWT [1966] 59 ITR 767, Supreme Court held that sum payable upon contingency does not become debt until said contingency has happened and liability to pay income-tax is present liability though it becomes payable after it is quantified in accordance with ascertainable data. In our view in hypothetical sale there is no liability to capital gains tax and as such there is no liability to capital tax at present. In T. S. Srinivasa Iyer v. CWT [1976] 104 ITR 625, identical question raised was rejected by Madras High Court. It was held that section 7 does not create any fiction of real sale so as to warrant even argument of fictional liability to capital gains tax and as such hypothetical expenditure in relation to that sale cannot be deducted therefrom. In Bharat Hari Singhania v. CWT [1979] 119 ITR 258, Allahabad High Court also took same view. It was held therein that estimated amount of capital gains tax cannot be treated as debt owed within meaning of section 2(m) of Act as it does not extend to notional debts. method of valuation prescribed by section 7 does not postulate deduction of any necessary expenses which assessee was bound to incur in relation to such sale. In Smt. Radhadevi Mohatta v. CWT [1981] 129 ITR 229, Bombay High Court held that fictional liability to capital gains tax on basis of value of assets determined on basis of hypothetical sale is in no sense of term present liability and no such liability can be said to have accrued. Thus notional tax on capital gains is not deductible. ratio laid down in above cases would squarely apply to instant case. 4. decision in CWT v. P. N. Sikand [1977] 107 ITR 922 (SC) has no application to facts of instant case. This decision has been considered in above three cases and it was distinguished. decisions in S. Naganathan v. CWT [1975] 101 ITR 287 (Mad.) and CWT v. K. M. Eapen [1978] 114 ITR 415 (Kar.) relied on by learned counsel for assessee have also no application to facts of instant case. Those are cases where property transferred by husband to wife was included in wealth of husband. question arose whether husband is entitled to exemption of Rs. 1 lakh under section 5(1) (iv) o f Act. It was held that benefit of section 5(1) (iv ) will be available also where property transferred to wife is included in wealth-tax assessment of husband in terms of section 4(1) (a) of Act. Those decisions have no application to facts of instant case. 5. decision of Allahabad High Court in CIT v. Nathimal Gaya Lal [1973] 89 ITR 190 (FB) has also no application to instant case. decision of Supreme Court in CIT v. J. H. Gotla [1985] 156 ITR 323 does not help assessee in any way. 6. In CIT v. Mother India Refrigeration Industries (P.) Ltd. [1985] 155 ITR 711, Supreme Court has held that legal fiction created for some definite purpose must be limited to that purpose and should not be extended beyond that legitimate field. In our view, fiction created under section 7(1) only enables WTO to estimate value at price which it would fetch if sold in open market on valuation date. It only creates hypothetical sale. No real sale is contemplated. This legal fiction created cannot be extended to hold that there is real sale. Thus, in our view on such hypothetical sale no capital gains tax would arise and any notional capital gains tax cannot be allowed as deduction from value of property. Thus, we uphold order of AAC. 7. In result, appeals fail and are dismissed. *** SMT. PADARTHY BABY SAROJINI v. WEALTH-TAX OFFICER