2004 (10) TMI 75 - HC - Income Tax

These review applications are filed by the Appropriate Authority under section 269UG in respect of purchase by the Central Government of immovable properties under certain cases of transfer under Chapter XX-C - The applications are filed for recalling part of the directions given by this court - In Hotel Mardias Pvt. Ltd. v. Union of India another Division Bench of this court has already taken the view that even if possession of the property is not handed over the vendors cannot be deprived of the right to get the possession. In this view of the matter also we do not find any compelling ground for review of our judgment - in the facts and circumstances of the case we are not inclined to grant this request because even the amounts of interest which have been withheld so far have been invested in fixed deposits with a scheduled bank and we have directed the applicant-Appropriate Authority to pay the amount of interest withheld so far along with the interest accrued thereon.

Summary

Issues Involved:
1. Delay in filing review applications.
2. Maintainability of review applications based on a consent order.
3. Entitlement to interest on the consideration amount deposited by the Appropriate Authority.
4. Interpretation of Section 269UG of the Income-tax Act, 1961.
5. Consequences of the Department not taking possession of the property.

Detailed Analysis:

1. Delay in Filing Review Applications:
The Appropriate Authority filed the review applications with a delay of 56 days. The Authority argued that the delay was due to the time required to follow due procedure for releasing the principal amount and analyzing the legal provisions. Although the explanation was not detailed, the court took a liberal view and entertained the review applications.

2. Maintainability of Review Applications Based on a Consent Order:
The opponents contended that the review applications were not maintainable as the order was passed based on consensus among the parties. The court noted that the Appropriate Authority had previously agreed to pay the interest accrued on the fixed deposit along with the principal amount. The court found substance in the opponents' argument that the Appropriate Authority's current stance was inconsistent with its earlier affidavit and submissions.

3. Entitlement to Interest on the Consideration Amount Deposited by the Appropriate Authority:
The Appropriate Authority argued that it was not liable to pay interest on the consideration amounts of Rs. 115 lakhs and Rs. 125 lakhs to the vendors and purchasers. The court rejected this argument, noting that the Appropriate Authority had previously committed to paying the interest accrued on the fixed deposit. The court emphasized that the stand taken by the Appropriate Authority in the affidavit was consistent with the statutory provisions of Section 269UG(4).

4. Interpretation of Section 269UG of the Income-tax Act, 1961:
The Appropriate Authority contended that Section 269UG(4) conferred discretion on whether to invest the consideration amount and pay interest. The court clarified that the provisions did not prohibit the payment of interest on the consideration amount. The court held that the Appropriate Authority's commitment to pay interest was in line with the statutory provisions and the submissions made during the hearing of the petitions.

5. Consequences of the Department Not Taking Possession of the Property:
The Department argued that it did not take possession of the property due to the pendency of the petitions. The court noted that the vendors had repeatedly called upon the Department to take possession. The court held that the Department's failure to take possession did not justify withholding interest on the consideration amount. The court cited a previous decision (Hotel Mardias Pvt. Ltd. v. Union of India) to support its view that vendors cannot be deprived of their right to get possession even if the Department does not take possession.

Conclusion:
The court dismissed the review applications, directing the Department to pay the withheld interest amounts along with accrued interest by December 15, 2004. The court declined to award exemplary costs to the opponents, noting that the withheld interest had been invested in fixed deposits and would be paid along with accrued interest.