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2015 (9) TMI 860 - SC - Income TaxFixing the value of PUC - SCN issued stating that discounted value of apparent consideration would be ₹ 69,00,000/- (Rs. 80,00,000/- minus ₹ 11,00,000/- being the amount it was undervalued by pre-emptive Purchase order of immovable property of Respondents) was passed under section 269UD(I) for a net consideration of ₹ 69 lakh on 23.02.1995 as property value was undervalued by more than 15% - Held that - We find from the judgment of the High Court 2005 (11) TMI 51 - BOMBAY High Court while quashing the aforesaid action of the Revenue, that the High Court has come to a categorical finding that there were lots of dissimilarities between Sale Instance Property (SIP) and Property Under Consideration (PUC). These are stated in detail in the judgment and on that basis finding of fact has been arrived at. After taking note of those dissimilarities the High Court relied upon the judgment of this Court in CB Gautam vs. Union of India reported 1992 (11) TMI 1 - SUPREME Court and held that the instance to the property that was taken could not be the basis of fixing the value of PUC and consequently for taking action under Section 269 UD(I) of the Income Tax Act. Since these are findings of fact arrived at by the High Court which are based on the material on record, we do not find any reason to interfere with that decision.
Issues Involved:
1. Undervaluation of property for tax purposes under Section 269UD(I) of the Income Tax Act. 2. Comparison of Sale Instance Property (SIP) and Property Under Consideration (PUC) for determining fair market value. 3. Judicial interpretation of the basis for fixing the value of the property under Section 269UD(I). Analysis: 1. The case involved a dispute regarding the undervaluation of property for tax purposes under Section 269UD(I) of the Income Tax Act. The Respondents argued that the apparent consideration had not been undervalued by 15% or more than the fair market value. The court noted that a show cause notice was issued to the Respondents based on the discounted value of the apparent consideration, leading to a pre-emptive purchase order under Section 269UD(I) for a net consideration of &8377; 69 lakh. 2. The High Court, while quashing the action of the Revenue, found significant dissimilarities between the Sale Instance Property (SIP) and the Property Under Consideration (PUC). The High Court's judgment highlighted these dissimilarities and concluded that the instance to the property taken could not be the basis for fixing the value of the PUC. The court referred to the judgment in CB Gautam vs. Union of India and emphasized that the value of the PUC should not be solely determined based on the SIP. The High Court's findings of fact were based on the material on record, leading to the dismissal of the appeal. 3. The Supreme Court, upon reviewing the High Court's decision, upheld the findings and reasoning provided by the lower court. The Court concurred with the High Court's analysis that the dissimilarities between the SIP and PUC were crucial in determining the fair market value and that the value of the PUC should not be solely derived from the SIP. As the High Court's decision was based on factual findings and legal interpretation, the Supreme Court found no grounds to interfere with the judgment and consequently dismissed the appeal.
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