1999 (9) TMI 83 - HC - Income Tax

Purchase Of Immovable Property By Central Government, Constitutional Validity, Appeal To Supreme Court, Interpretation OF STATUTES

Issues Involved:
1. Validity of the discounting of the apparent consideration by the Appropriate Authority under Section 269UD of the Income-tax Act, 1961.
2. Definition and interpretation of "apparent consideration" under Section 269UA(b) of the Income-tax Act.
3. Application of precedents and binding nature of previous judgments.

Issue-wise Detailed Analysis:

1. Validity of the discounting of the apparent consideration by the Appropriate Authority under Section 269UD of the Income-tax Act, 1961:
The petitioner challenged the order dated August 29, 1989, by the Appropriate Authority, which fixed the apparent consideration at Rs. 21,14,684, instead of the agreed Rs. 21,50,000, discounting Rs. 35,316. The petitioner argued that this discounting was contrary to the provisions of the Income-tax Act, as the balance amount was to be paid within 15 days of obtaining the necessary approval, which was earlier than the period stipulated by the Act for payment by the Government. The respondents contended that the discounting was in accordance with Section 269UA(b), which mandates discounting for deferred payments, and supported their argument with precedents.

2. Definition and interpretation of "apparent consideration" under Section 269UA(b) of the Income-tax Act:
Section 269UA(b) defines "apparent consideration" as the consideration specified in the agreement, and if any part is payable after the agreement date, it should be deemed the discounted value as on the agreement date. The court examined the clauses of the agreement, which stipulated that Rs. 3,01,000 was paid upfront, and the balance was to be paid within 15 days of obtaining no objection from the authority. Since the entire consideration was not paid on the agreement date, the apparent consideration had to be discounted as per the Act and rules. The court rejected the petitioner's argument that the discounted value should be determined with reference to the payment date, citing the Supreme Court's decision in C. B. Gautam v. Union of India [1993] 199 ITR 530, which upheld the provisions of Chapter XX-C.

3. Application of precedents and binding nature of previous judgments:
The court referred to several precedents, including Smt. Vimla Devi G. Maheshwari v. S. K. Laul [1994] 208 ITR 734, which upheld the discounting of deferred payments. The Supreme Court dismissed the special leave petition against this judgment, making it binding under Article 141 of the Constitution. The court also discussed Shrichand Raheja v. S. C. Prasad [1995] 213 ITR 33, noting that the Supreme Court allowed the appeal against the transferee's petition but did not affect the binding nature of the judgment in Vimla Devi's case. The court emphasized that the language of Section 269UA(b) was clear and unambiguous, and the deduction was mandatory for deferred payments.

Conclusion:
The court concluded that the discounting of the apparent consideration was valid and in accordance with the provisions of the Income-tax Act and upheld by binding precedents. The petition was dismissed, and the rule was discharged with no order as to costs. The court also noted that the petitioner did not challenge the constitutional validity of the provisions and that any such challenge would be untenable in light of the Supreme Court's decision in C. B. Gautam's case.

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