2007 (10) TMI 257 - HC - Income Tax

Purchase of immovable property by govt. - there were disputes as to in whose favour the property ought to be conveyed - there was also a dispute as to the apportionment because owners claimed various amounts, much more than the compensation worked out and deposited - Once there be a provision and power, merely because a wrong section is quoted or not quoted, in our opinion, cannot result in abrogating the order of purchase hence order of acquisition u/s 269UE & order of deposit were legal

Issues Involved:
1. Validity of the acquisition order under section 269UD(1) of the Income-tax Act.
2. Compliance with section 269UG(1) regarding the tender of apparent consideration.
3. Disputes concerning the apportionment and title to the consideration amount.
4. Application of section 269UH(1) regarding the abrogation of the acquisition order.

Detailed Analysis:

1. Validity of the acquisition order under section 269UD(1) of the Income-tax Act:
The petitioners challenged the acquisition order dated September 22, 1993, under section 269UD(1) of the Income-tax Act, claiming that the fair market value of the property was undervalued. The appropriate authority had determined the fair market value to be at least Rs. 1,95,00,000, which was significantly higher than the apparent consideration of Rs. 1,55,00,000. The petitioners argued that this determination was flawed due to factual errors in the valuation process. However, the court found that the appropriate authority had followed due process and that the order did not suffer from any infirmity.

2. Compliance with section 269UG(1) regarding the tender of apparent consideration:
The petitioners contended that the Central Government failed to tender the apparent consideration within the time frame stipulated by section 269UG(1), which mandates payment within one month from the end of the month in which the property vests in the government. The property vested on October 25, 1993, and the amount was deposited on October 29, 1993, but not tendered to the entitled persons. The court examined whether this failure to tender the amount directly to the entitled persons within the specified period resulted in the abrogation of the acquisition order.

3. Disputes concerning the apportionment and title to the consideration amount:
The court noted multiple disputes among the parties regarding the apportionment and title to the consideration amount. Claims were made by the owners, the first purchasers, and Harsiddh Corporation, each demanding significant sums. The appropriate authority had deposited the amount in the public deposit account under section 269UG(3), citing these disputes. The court found that the existence of these disputes justified the deposit under section 269UG(3), as there were pending suits and conflicting claims that needed resolution.

4. Application of section 269UH(1) regarding the abrogation of the acquisition order:
The petitioners argued that the failure to tender the apparent consideration within the specified period should result in the abrogation of the acquisition order under section 269UH(1). However, the court held that the disputes regarding apportionment and title to the consideration amount fell within the exceptions provided by sections 269UG(2) and 269UG(3). The court concluded that the appropriate authority's decision to deposit the amount due to these disputes was within its jurisdiction, and thus the acquisition order did not stand abrogated.

Conclusion:
The court ruled that the acquisition order under section 269UD(1) was valid and did not suffer from any infirmity. The disputes regarding the apportionment and title to the consideration amount justified the deposit under section 269UG(3). Consequently, the order of pre-emptive purchase did not stand abrogated, and the petitions were dismissed. The rule was discharged in each of the three petitions, with no order as to costs.

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