2000 (2) TMI 76 - HC - Income Tax

Summary

Issues:
1. Lack of reasonable opportunity given to vendor and vendee in property acquisition proceedings under section 269UD of the Income-tax Act, 1961.
2. Entitlement of interest to the vendor for the period when possession is taken but consideration remains unpaid.
3. Interpretation of agreements regarding payment of consideration for property sale and calculation of outstanding amounts.
4. Determination of interest rate payable to the vendor in case of delayed payment due to acquisition proceedings under Chapter XX-C.

Issue 1: Lack of Reasonable Opportunity in Property Acquisition Proceedings
The appeal was directed against a judgment setting aside the order of the appropriate authority due to discrepancies in the acquisition proceedings under section 269UD. The learned single judge emphasized the importance of providing a reasonable opportunity to the vendor and vendee, citing the decision in the case of C. B. Gautam v. Union of India. The court rejected a plea to remit the matter back to the appropriate authority, citing limitations under the Act. As no reasonable opportunity was given for property acquisition as required under section 269UD, the appeal was found to lack merit.

Issue 2: Entitlement of Interest to Vendor
In the case of delayed payment where possession has been taken but consideration remains unpaid, the vendor may be entitled to interest. Citing cases like Rajalakshmi Narayanan v. Margaret Kathleen Gandhi and Appropriate Authority v. Smt. Sudha Patil, the court discussed the entitlement of interest to the vendor based on the circumstances of each case. The court determined that the vendor was entitled to interest at a rate of 12% from the Government for the period when the amount could not be paid due to acquisition proceedings under section 269UD.

Issue 3: Interpretation of Agreements and Outstanding Amounts
The court analyzed agreements between the Vysya Bank and Delite Housing Corporation regarding the sale of flats, detailing the stages at which consideration was payable. The court noted that the bank had paid a significant portion of the consideration, with only 5% remaining to be paid at the time of conveyance. The court directed the payment of the balance amount with interest as per the agreement.

Issue 4: Determination of Interest Rate for Delayed Payment
The court referred to various Supreme Court judgments to determine the appropriate interest rate payable to the vendor in case of delayed payment due to acquisition proceedings. The court considered factors such as delayed payment on account of acquisition proceedings and awarded interest rates based on the facts of each case. In this case, the court awarded interest at a rate of 12% to the vendor for the delayed payment.

In conclusion, the appeal was dismissed, and the cross-appeal of the vendor was allowed in part, entitling the vendor to interest at a rate of 12% for the delayed payment period.