1995 (7) TMI 3 - HC - Income Tax

Appropriate Authority, High Court, Law Applicable, Movable Property, Purchase Of Immovable Property By Central Government, Territorial Jurisdiction

Issues Involved:
1. Deletion of respondent No. 2.
2. Jurisdiction of the High Court of Gujarat.
3. Validity of the show-cause notice under section 269UD(1A) of the Income-tax Act, 1961.
4. Comparison of the Property Under Consideration (PUC) with Sale Instance Properties (SIPs).
5. Consideration of tenancy and conversion charges.
6. Satisfaction based on objective facts under section 269UD of the Act.
7. Locus standi of the petitioner.

Detailed Analysis:

1. Deletion of Respondent No. 2:
The learned advocate for the petitioner requested to delete respondent No. 2 from the petition as no relief was claimed against him. The court granted this request, making respondent No. 1 the sole respondent.

2. Jurisdiction of the High Court of Gujarat:
The court addressed the preliminary contention regarding territorial jurisdiction. It was established that part of the cause of action arose within the territorial jurisdiction of the High Court of Gujarat, as the notice under section 269UD(1A) was issued from Ahmedabad, and the petitioner submitted his reply there. Therefore, the court held that it had jurisdiction to entertain the petition under Article 226(2) of the Constitution of India.

3. Validity of the Show-Cause Notice:
The petitioner contended that the show-cause notice was vague and lacked material particulars on how the SIPs could be compared to the PUC. The court found merit in this argument, noting that the notice did not clearly explain the comparability of the properties. The court held that the notice was vague, and on this ground alone, the orders were liable to be quashed.

4. Comparison of the PUC with SIPs:
The court scrutinized the comparison made by the appropriate authority between the PUC and the SIPs. It was observed that the SIPs were located in superior areas compared to the PUC. The court held that if the locations were not comparable, no further inquiry should have been conducted, and an order for pre-emptive purchase could not be passed based on such comparisons.

5. Consideration of Tenancy and Conversion Charges:
The petitioner argued that the PUC was occupied by sitting tenants and was under "old grant rights," requiring conversion charges to be paid. The court found that the appropriate authority failed to properly consider these factors. The court noted that in a similar case (SIP 2), the authority had considered tenancy and conversion charges relevant but did not apply the same reasoning in the present case. This inconsistency was deemed an error of law apparent on the face of the record.

6. Satisfaction Based on Objective Facts:
The court emphasized that the satisfaction required under section 269UD must be based on objective facts. It was noted that the appropriate authority did not provide sufficient grounds or reasons for concluding that there was an understatement of more than 15 percent in the consideration of the PUC. The court held that the order lacked the necessary objective satisfaction and was therefore not in accordance with law.

7. Locus Standi of the Petitioner:
The respondent's counsel argued that the petitioner had no locus standi to challenge the order under section 269UD(1). The court rejected this contention, stating that if a show-cause notice is required to be given to the transferee, it is open to the aggrieved party to challenge the decision and raise all available contentions. The court held that the petitioner had the right to challenge the order.

Conclusion:
The petition was allowed, and the impugned orders dated January 11, 1995, were quashed and set aside. The respondent was directed to complete the necessary formalities within six weeks, including the issuance of a clearance certificate. The rule was made absolute, and no order as to costs was passed.

← Previous Next →