1992 (9) TMI 23 - HC - Income Tax

Summary

Issues Involved:
1. Legality of the order u/s 269UD(1) of the Income-tax Act, 1961.
2. Preliminary objections regarding the maintainability of the writ petition.
3. Locus standi of the petitioners.
4. Nature of the transaction and computation of apparent consideration.

Summary:

1. Legality of the Order u/s 269UD(1):
The petitioners challenged an order dated June 5, 1987, issued by the appropriate authority u/s 269UD(1) of the Income-tax Act, 1961, which directed the purchase of a portion of premises No. 2, Ballygange Park Road, Calcutta, by the Central Government for Rs. 72,25,086. The petitioners had entered into an agreement to purchase the property from respondent No. 6, but the appropriate authority held that the apparent consideration stated was not conclusive and recalculated it to Rs. 72,25,086.

2. Preliminary Objections:
The respondents raised two preliminary objections:
- The Supreme Court's stay order in Union of India v. C. B. Gautam did not bar the High Court from disposing of writ applications on grounds other than the constitutional validity of Chapter XX-C of the Act.
- The petitioners had no locus standi to file the writ petition as they were merely agreement holders with no legal right in the property.

The court held that the Supreme Court's stay order did not preclude the High Court from deciding on issues not involving the constitutional validity of Chapter XX-C. Additionally, the court found that the petitioners had locus standi as their agreement to purchase the property conferred upon them a substantial interest in the property.

3. Locus Standi of the Petitioners:
The court disagreed with the Karnataka High Court's decision in Rajata Trust v. Chief CIT, which held that an agreement holder could not challenge an order u/s 269UD. The court held that the petitioners had a legal right to enforce the agreement and protect their interest in acquiring the property, thus granting them the locus standi to file the writ petition.

4. Nature of the Transaction and Computation of Apparent Consideration:
The court examined whether the transaction was a sale, exchange, lease, or an anomalous transfer u/s 269UA(f)(ii) and (d)(ii). It found that the transaction involved more than just monetary consideration, including construction obligations, which did not fit the definition of a sale or exchange. The court held that the appropriate authority erred in not considering the market value of the construction and brokerage as part of the apparent consideration. The authority's decision was based on incorrect legal principles regarding consideration and brokerage.

Conclusion:
The writ petition was allowed, and the impugned order dated June 5, 1987, was quashed. The appropriate authority was directed to reconsider Form No. 37-I afresh in accordance with the law and either direct the Central Government to purchase the premises based on the correct apparent consideration or issue a "no objection certificate" within 60 days. No order as to costs was made.