1998 (11) TMI 83 - HC - Income Tax

Summary

Issues:
Challenge to order under section 269UD(1) of the Income-tax Act, 1961 regarding purchase by the Central Government of a property under an agreement to sell dated April 26, 1995.

Analysis:
The petitioners contested the order based on two main grounds. Firstly, they argued that the liability for ground rent and property tax, which was transferred to them, should have been considered by the appropriate authority to adjust the sale consideration. The petitioners claimed this would have kept the difference between the apparent consideration and market value below 15%. Secondly, they contended that the property in question was incorrectly compared to a property at A-27, Swasthia Vihar, instead of a more suitable comparison like the property at 135, Madhuban. The respondents defended the order, stating that all relevant factors were considered, and the order was justifiable.

The court addressed the contentions sequentially. Regarding the liability for ground rent and property tax, it was noted that the agreement did not quantify this liability, and the parties had marked it as "not applicable" in the relevant form. The court highlighted that the petitioners failed to provide a clear basis for the authority to consider this aspect, leading to the dismissal of this argument. On the comparison issue, the court acknowledged the differences in Floor Area Ratio (FAR) between the properties and the age of the sale instances. The court found the comparison with A-27, Swasthia Vihar, more appropriate due to similar FAR and recency of the sale.

The petitioners also challenged the calculation method used by the appropriate authority, citing a Supreme Court case. The court observed that regardless of the calculation approach, the difference between the apparent consideration and market value exceeded 15%. The absence of a specific finding on tax evasion motives for undervaluation was deemed not crucial for the validity of the purchase order. The court stressed that their role was not to act as an appellate authority but to ensure a fair decision-making process, finding no violations of natural justice or perversity in the order.

Additionally, the court noted the auction of the property following the petition and the highest bid received. Ultimately, the court found the petition lacking merit and dismissed it without costs, vacating the interim order staying the sale confirmation.

This detailed analysis of the judgment highlights the key arguments, considerations, and conclusions reached by the court in addressing the challenges to the order under section 269UD(1) of the Income-tax Act, 1961.