2007 (9) TMI 234 - HC - Income Tax

Order of purchase of immovable property by Central Govt. - Appropriate Authority has not determined the fair market value of the said flat so as to satisfy the test of difference of 15% criteria - there is no finding recorded in the impugned order to the effect that there is under valuation to the extent of 15% or more of the fair market value - comparable sale instance not furnished impugned order of purchase is not valid is liable to be quashed

Summary

Issues:
1. Justification of passing the impugned order under Section 269 UD(1) of the Income Tax Act for the purchase of a flat.
2. Determination of fair market value and compliance with the 15% criteria.
3. Comparability of sale instances and valuation of the property.

Issue 1:
The petition challenged the Appropriate Authority's order dated 25/2/1993 under Section 269 UD(1) of the Income Tax Act for the purchase of a flat. The court noted that a previous order had been set aside, and the matter was remanded for fresh consideration in light of directions from the Apex Court. The petitioners objected to the purchase, citing lack of valuation report and discrepancies in the sale instances referred to in the impugned order.

Issue 2:
The petitioners argued that the impugned order lacked determination of fair market value to meet the 15% criteria as required by law. The first sale instance showed a price variation of only about 11%, below the threshold for invoking Chapter XX-C. The second and third sale instances were deemed incomparable, and the Appropriate Authority failed to establish under valuation by 15% or more. The court found the order to be in breach of the Apex Court's mandate and unsustainable.

Issue 3:
The Revenue contended that the order was justified based on available sale instances and the lack of supporting evidence from the petitioners. However, the court held that without establishing significant under valuation, the order could not be sustained. It was emphasized that determining fair market value was crucial before passing such purchase orders, as seen in previous court decisions. The court ultimately quashed and set aside the impugned order dated 25th February 1993, ruling in favor of the petitioners.

This detailed analysis of the judgment highlights the key legal arguments, interpretations, and conclusions reached by the court regarding the issues raised in the case.