1994 (7) TMI 5 - HC - Income Tax

Summary

Issues:
1. Deduction of interest for determining the designated value of the apparent consideration.
2. Permissibility of deductions other than those provided under the Act or Rules from the consideration stated in the agreement.
3. Liability of transferor for stamp duty and registration charges in the context of Chapter XX-C of the Income-tax Act.

Analysis:

1. The court addressed the contention that no deduction on account of interest should be made for determining the designated value of the apparent consideration as on the date of the agreement for sale. The court referred to the provision of section 269UA(b) which defines "apparent consideration" and allows for the discounted value of consideration payable after the agreement date to be determined by adopting a prescribed rate of interest. The court upheld the authority's decision to deduct interest in accordance with the law.

2. The court considered the argument regarding deductions other than those provided under the Act or Rules from the consideration stated in the agreement. It was contended that the amount payable to the transferor should equal the apparent consideration as defined under section 269UA(b). The court agreed partially with this contention, stating that the expenses of conveyance should only be borne by the transferor if they were required to be actually incurred. The court emphasized that no liability for conveyance expenses arises if the property vests in the Central Government under Chapter XX-C without the need for an instrument of conveyance.

3. The court analyzed the liability of the transferor for stamp duty and registration charges in the context of Chapter XX-C. It was highlighted that such expenses should only be borne by the transferor if they were actually required to be incurred. The court emphasized that the consideration to be paid to the transferor is the "apparent consideration" as defined in the Act, and no deductions other than those specified in the law are permissible. The court referenced a previous Division Bench decision that supported the view that deductions for registration charges and stamp duty from the consideration in the agreement are not justified.

In conclusion, the court allowed the petitions partially, quashing the orders directing deductions for stamp duty and registration charges. The court emphasized that the consideration to be paid to the transferor should be based on the apparent consideration as defined in the law, without additional deductions not specified under the relevant provisions.