1996 (8) TMI 60 - HC - Income Tax

Appropriate Authority, Fair Market Value, Leasehold Interest, Movable Property, Petition Against Order, Purchase Of Immovable Property By Central Government, Restriction On Transfer, Writ Petition

Issues Involved:
1. Determination of fair market value of the property.
2. Relevance of circle rate fixed by the District Collector.
3. Use of an exemplar property for valuation.
4. Consideration of lease deed and agreement provisions.
5. Right of the petitioner to maintain the writ petition.

Detailed Analysis:

1. Determination of Fair Market Value of the Property:

The petitioner challenged the order dated August 30, 1994, by the Appropriate Authority under Section 269UD of the Income-tax Act, 1961, ordering the purchase of plot No. B-70, Sector 14, NOIDA. The petitioner argued that the fair market value determined by the authority was incorrect. The authority used plot No. A-8, Sector 14, NOIDA, as an exemplar, which was a built-up property sold for Rs. 44,00,000. The Valuation Officer estimated the land value at Rs. 4,057 per sq. mtr., adding Rs. 101.43 for appreciation and Rs. 207.93 for locational advantage, totaling Rs. 4,370 per sq. mtr. The petitioner's agreed sale consideration was Rs. 3,667.69 per sq. mtr.

2. Relevance of Circle Rate Fixed by the District Collector:

The petitioner contended that the circle rate fixed by the District Collector for stamp duty purposes was not considered. The court held that the circle rate was irrelevant because the agreed sale price was Rs. 3,667.69 per sq. mtr., significantly higher than the Collector's rate of Rs. 2,400 per sq. mtr. The court cited Daya Engineering Works v. Union of India, which held that circle rates are not relevant for determining fair market value under Section 269UD(1) of the Act.

3. Use of an Exemplar Property for Valuation:

The petitioner argued that plot No. A-8 was not a proper exemplar as it was a built-up property with a composite sale consideration. The court found that the Valuation Officer's bifurcation of the Rs. 44,00,000 sale consideration into land and building values was arbitrary and lacked a rational basis. The appropriate authority failed to provide details on how the building's value was determined, making their conclusion on fair market value perverse.

4. Consideration of Lease Deed and Agreement Provisions:

The petitioner highlighted that the lease deed and agreement to sell included provisions affecting the fair market value, such as a 25% transfer charge payable to NOIDA. The court agreed that these provisions were not considered by the authority. The fair market value should account for liabilities and obligations, such as the unearned increase payable to NOIDA. The court found that the appropriate authority's determination of fair market value was flawed, as it did not consider these additional liabilities.

5. Right of the Petitioner to Maintain the Writ Petition:

The respondents argued that the petitioner had no right to challenge the order under Section 269UD. The court rejected this, citing the Supreme Court's judgment in C. B. Gautam v. Union of India, which held that affected parties must be given a hearing. The court emphasized that a purchaser is an interested party under Section 269UA(e) and has the right to contest and challenge the proceedings. The court found the petitioner's right to maintain the writ petition valid.

Conclusion:

The court quashed the impugned order dated August 30, 1994, and directed respondents Nos. 1 and 2 to bear the costs of the writ petition. The court held that the appropriate authority's determination of fair market value was perverse and lacked a rational basis, and the petitioner had the right to challenge the order.

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