2001 (7) TMI 52 - HC - Income Tax

Summary

Issues Involved:
1. Interpretation and applicability of the definition of "apparent consideration" under section 269UA(b) of the Income-tax Act, 1961.
2. Legality of the deduction of stamp duty and registration charges from the apparent consideration.
3. Entitlement to interest on the deducted amount.

Detailed Analysis:

1. Interpretation and Applicability of "Apparent Consideration":
The primary issue revolves around the interpretation of "apparent consideration" as defined under section 269UA(b) of the Income-tax Act, 1961. The court examined whether the deduction of stamp duty and registration charges from the apparent consideration is permissible under this definition.

The court noted that section 269UA(b) defines "apparent consideration" as the consideration for the transfer specified in the agreement. The only adjustment allowed under this section is for deferred payments, which must be discounted to their present value. The court emphasized that no other deductions, including those for stamp duty and registration charges, are authorized by the statute.

2. Legality of Deducting Stamp Duty and Registration Charges:
The petitioner contended that the deduction of Rs.24,97,550 towards stamp duty and registration charges was unauthorized. The court agreed, stating that the definition of "apparent consideration" does not include provisions for such deductions. The court referred to the Gujarat High Court's decision in Pradip Ramanlal Sheth v. Union of India [1993] 204 ITR 866, which held that future costs like stamp duty and registration charges could not be deducted from the apparent consideration.

The court further supported its stance by citing the Supreme Court's refusal to challenge the Gujarat High Court's decision in Union of India v. Kaumudini Narayan Dalal [2001] 249 ITR 219 (SC), reinforcing the principle that the apparent consideration should be the amount specified in the agreement without deductions for stamp duty or registration charges.

3. Entitlement to Interest:
The petitioner also sought interest on the unlawfully deducted amount. The court found that since the deduction was unauthorized, the petitioner was entitled to compensation for the deprivation of the amount. The court awarded interest at the rate of 12% per annum from February 24, 1989, until the payment is made, deeming this rate appropriate for the unlawful deprivation of funds.

Conclusion:
The court concluded that the appropriate authority was not justified in deducting Rs.24,97,550 for stamp duty and registration charges from the apparent consideration. The impugned orders directing such deductions were set aside. The respondents were directed to pay the deducted amount to the petitioner with interest at the rate of 12% per annum from February 24, 1989, until the payment is made, within 60 days from the judgment date. The petition was allowed, and the rule was made absolute with no order as to costs.