2019 (9) TMI 951 - HC - Indian Laws

Compulsory Acquisition - Taking over of petitioner's property by the Central Government - pre-emptive purchase under Chapter XX-C, consisting of Sections 269U to 269UO of the Income Tax Act, 1961 as inserted by Finance Act, 1986 - liability of purchaser to pay the pending amount - under-valuation of property or not - HELD THAT - What prompted the appropriate authority to take action was the fact that apartment No.62-B in Building No.103 on 6th floor which was also located in the same premises and was similarly situated was proposed to be sold for ₹ 20.00 lakh odd and consequently no fault can be found with the finding that as against the market value of ₹ 20.00 lacs, the petitioners were selling the property at a much lesser rate. Liability of purchaser to pay the pending amount - HELD THAT - The reading of the agreement does not reveal that any liability of the purchaser remained. Petition dismissed - other related applications also dismissed.

Summary

Issues:
Challenge to Central Government's action of pre-emptive purchase under Income Tax Act, 1961 - Under-valuation of property - Dispute over pending amount in agreement to sell.

Analysis:

The petitioners challenged the Central Government's action of taking over their property through pre-emptive purchase under Chapter XX-C of the Income Tax Act, 1961. The property in question was an apartment allotted to the petitioners by a real estate company in 1991. An agreement to sell was entered into with a third party in 1994, leading to a dispute over the property's valuation. The petitioners argued that there was no under-valuation as the cost of acquisition was correctly stated in Form 37-I. However, the respondents contended that the property was undervalued compared to a similar property in the same complex, which was priced higher. The court agreed with the respondents, noting that the petitioners were selling their property at a much lower rate than the market value of similar properties in the vicinity.

Another point of contention was the pending amount of Rs. 2,98,424/- in the agreement to sell. The petitioners argued that this amount should have been paid by the Central Government as part of the purchase price. However, the respondents argued that the agreement did not specify the pending amount as the purchaser's liability, indicating that the petitioners had agreed to sell the property for the stated amount. The court found that the interpretation given by the petitioners was flawed, and the agreement did not indicate any remaining liability on the purchaser.

In conclusion, the court dismissed the petition, upholding the Central Government's decision to acquire the property. The court found no merit in the petitioners' arguments regarding the property's valuation and the pending amount in the agreement to sell. The dismissal of the main case also led to the disposal of any pending applications related to the matter.