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TMI Blog2009 (6) TMI 593X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Income-tax Act, 1961 by the Appropriate Authority for purchase of the property belonging to petitioners Nos. 1 and 2 and agreed to be sold to petitioners Nos. 3 and 4. 2. To state in brief, the admitted facts are that petitioners Nos. 1 and 2, being brothers inter se, hold the property situated at Ghatla Village, Chem- bur. The property bears Plot No. 565 and is having total FSI 870.8 sq. mtrs. Petitioners Nos. 1 and 2 hold half share each in the same. Petitioners Nos. 1 and 2 separately entered into development agreement with petitioners Nos. 3 and 4 and the consideration for the property to be sold was fixed at Rs. 26 lakhs each. As per the agreement, petitioners Nos. 3 and 4 were to construct and give one flat of 988 sq. ft. area to each of petitioners Nos. 1 and 2. The value of the construction was about Rs. 6 lakhs. They were also to be provided with alternative accommodation till the said flat could be ready and given to them. The period for development and construction of the flat was fixed at 18 months and the approximate rent for the alternative accommodation to be provided to each of them was assessed at Rs. 4,000 per month. The agreement with petitioner No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e parties and perused the show-cause notices issued by respondent No. 1, valuation reports prepared by respondents Nos. 2, 3 and 4, the replies filed by the petitioners and the affidavits filed on behalf of the parties. 5. It is not in dispute that the total FSI available to petitioners Nos. 1 and 2 is 890.8 sq. mtrs. and there was some structure on the same and the pro- perty was used by petitioners Nos. 1 and 2 for their residence. Petitioners Nos. 1 and 2 hold half share each in the said property and thus the FSI available to each of them was 445.4 sq. mtrs. Converted into square feet, the FSI available to each of them was 3,596 sq. ft. As per the agreement, petitioners Nos. 3 and 4, petitioners Nos. 3 and 4 would construct one flat having area of 988 sq. ft. at the cost of Rs. 6 lakhs. Thus, deducting the FSI used in the flats, the FSI available to the purchaser would be 2,698 sq. ft. The agreed consideration was Rs. 26 lakhs, inclusive of the amount of Rs. 6 lakhs being the cost of construction of the flat to be given to the transferor. As per the valuation report, in respect of the share of petitioner No. 1, Dattaram, in view of deferred payments to the extent of Rs. 16 l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e rate was Rs. 2,699 per sq. ft. of the FSI. After deduction of the cost of construction and the cost of borrowing, the net rate was assessed at Rs. 1,749 per sq. ft. That transaction had taken place on March 4, 1994. The second transaction pertains to Bungalow No. 2 also in Brindavan Park, CHS Ltd., Deonar. The area was 2,012 sq. ft. The agreed rate was Rs. 2,371. After necessary deductions in respect of the cost of borrowing and the construction, the net rate was found to be Rs. 1,476 per sq. ft. This transaction had taken place on March 20, 1994. The third trans- action was in respect of land and the structure at Chembur. The available FSI was 2,655 sq. ft. and the rate was Rs. 1,531 per sq. ft. of the FSI. 9. In the reply submitted by the petitioners, it was pointed out that the first two properties were bungalows in Brindavan Park Co-op. Housing Society. That area is known as the Brindavan Bungalow Scheme and it is a very peaceful place surrounded by lush greenery with the hills and rich gentry used to reside in those bungalows. The residents of that area included famous film star Raj Kapoor and his residence is still situated in that Bun- galow Scheme. It is contended tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red by the Appropriate Authority. The Appro- priate Authority appears to have taken into considerations the three trans- actions which were relied upon in the show-cause notice. In the affidavit filed by M. P. Ahuja, the Assistant Commissioner of Income-tax on February 25, 2009, it is contended that those transactions were not relied upon. However, on reading paragraph 8 of the impugned order, it is difficult to accept this contention. 11. The learned counsel for the petitioners placed on record the sanctioned development plan of the M ward where this property is situated. He pointed out the location of the properties the transactions in respect of which were relied upon by the Appropriate Authority and those relied upon by the petitioners, The learned counsel for the respondents con- tended that this map was not placed before the Appropriate Authority. On hearing the learned counsel for the parties, in our opinion, to understand the location of this property and other properties involved in other trans- actions, this map would be useful. On a perusal of the record, we find that the Appropriate Authority has not properly considered the different trans- actions relied upon by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the Appropriate Authority worked out the con- sideration payable by the Central Government to Rs. 18,70,340. He observed that out of the amount of consideration of Rs. 20 lakhs, Rs. 4 lakhs were paid as earnest money and payment of the remaining Rs. 16 lakhs was deferred and, therefore, discounted value of the deferred pay- ment was worked out at Rs. 14,70,340. By making addition of Rs. 4 lakhs already paid, he determined the consideration to Rs. 18,70,340. In the case of petitioner No. 2, Pandarinath, the amount of Rs. 1 lakh was paid as ear- nest money and payment of the balance amount of Rs. 19 lakhs was deferred. The discounted value of the deferred payment was worked out at Rs. 17,68,430. By adding Rs. 1 lakh already paid, the consideration payable by the Central Government was worked out at Rs. 18,68,430 by the Appro- priate Authority. As already pointed out, as per the valuation report, net apparent consideration of property of petitioners Nos. 1 and 2 was worked out at Rs. 25,05,710 and Rs. 25,14,480 and that the valuation report was basis of the show-cause notices. It would show that the Appropriate Authority gave conflicting and contrary findings in respect of the net a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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