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TMI Blog2011 (12) TMI 145X X X X Extracts X X X X X X X X Extracts X X X X ..... vitiated. Further Section 269 UF (1) stipulates consideration for such purchase, an amount equal to the amount of the apparent consideration. There was complete non application of mind on the part of the Appropriate Authority in stating in the impugned order that the amount payable was Rs.18,68,430/ when the apparent consideration was admittedly Rs.25,14,480/. Quantum of deposit is invalid Moreover, neither dispute was to title of property nor to the persons who should receive the payment, thereby, conditions mentioned in 269UG(2) and 269UG(3) are not satisfied which permit the Central Government to deposit the purchase price with the Appropriate Authority (instead of tender to the owners). Therefore, the deposit made in the P.D. account of the Appropriate Authority by the Central Government was impermissible and not in accordance with law. In view of the failure on the part of the Appropriate Authority to tender the apparent consideration within the period set out in Section 269UG of the Act, it has to be held that the order passed under Section 269UD(1) of the Act stood abrogated and the property is revested to the Petitioners. - Decided in favor of assessee. - Writ Petitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bove. Under the said agreements, the said property was to be developed at the cost of the Transferee as per the proposed building plans annexed to the agreements. Each of the owners was to get an ownership flat admeasuring 988 sq. ft. built up area as shown in the plan annexed to the agreements. An amount of Rs.6 lacs was to be adjusted towards construction costs of the flat out of the lump sum consideration of Rs.26 lacs to be paid by the Transferee in instalments, as per the payment schedule mentioned in the agreements. The providing of the flat was stated to be the essence of the contract. The specifications, amenities and facilities to be provided in the flat were enlisted in the Second Schedule to the agreements. It was agreed that within one month from the grant of Intimation of Disapproval in respect of the proposed building or within six months from the date of agreement, whichever is earlier, the owners were to hand over vacant physical possession of the property to the Transferee. The said agreements contemplated completion of the development and handing over the flats to the owners within 18 months from the grant of commencement certificate. The Transferee was however, d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d out in the case of Dattaram as follows: Particulars Amount Total consideration Rs.26,00,000/ Amt. to be adjusted against the const. cost of the flat to be given Rs.6,00,000/ Apparent consideration Rs.20,00,000/ Deferred value (on account of instalments) Rs.18,70,340/ Liability: Construction Cost Rs.6,00,000/ Rent for 18 Months @ Rs.4000/p. m. Rs.72,000/ Credit: scrap value 36,630/ Credit: scrap value Rs.36,630/ Net Consideration Rs.25,05,710/ Area of Land Total Land Area 445.4 sq. mtrs. Total FSI available 890.8 X10.764X1/2 X0.75 3596 sq.ft. FSI available to the Developer 2698 sq.ft. FSI rate per sq.ft. (built up) Rs.929/ In response to the said show cause notices, the Transferee filed written submissions. As per the calculation given by the Transferee the rate per sq. ft. of FSI of the said property after making adjustments came to Rs. 1,017/. Four sale instances were cited by the Transferee to show that the rate of the said property as per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uthority's P.D. Account. 10. By letter dated 30th September, 1994, the owners through their Advocates informed the Appropriate Authority that pursuant a summons being issued under section 131 of IT Act, the original title deeds of property had already been handed over on 27th September, 1994 to Shri Pradeep Sharma, the then Deputy Commissioner of Income Tax, and informed the Appropriate Authority that they were ready and willing to hand over physical possession of the said property subject to the Central Government complying with the terms and conditions of the agreements which the Transferee was required to comply with. The Appropriate Authority addressed a letter dated 11th October, 1994 to the owners, the material portion which is reproduced hereinbelow: "As regards the question of possession, I have been directed to state as under: Members of Appropriate Authority discussed the question of possession of the property with reference to the purchase order, Court's order, terms of Agreement for transfer and letter of the transferor. The Transferor has represented that he will give possession of the property, as per the terms of transfer on alternate accommodation being ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elied upon by the Appropriate Authority in the show cause notice and that it is difficult to accept the contention taken in the affidavit filed by Mr. M.P. Ahuja, Assistant Commissioner of Income Tax on 25-2-2009, that those transaction were not relied upon. It was noted that as per calculation made by the Appropriate Authority, the apparent consideration is about Rs.932/per sq. ft. of FSI and if 15% is added therein this come to Rs.1,072/. On the other hand, as per calculation of Petitioners the consideration was Rs.1,017/per sq. ft. of FSI and if 15% is added thereto, it comes to Rs.1,170/and therefore the difference between the fair market price fixed by the Appropriate Authority and the apparent consideration with an addition of 15% is not much. The Appropriate Authority should have given valid reasons and data to as to how the market value could be Rs.1,200/sq. ft. The Division Bench observed that the Appropriate Authority had given conflicting and contrary findings in respect of net apparent consideration and the fair market value to be paid by the Government to the Petitioners as according to the show cause notice it was stated to be Rs.18,68,430/, whereas according to the V ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase under Chapter XXC was therefore erroneous; (ii) that there was a conflict as regards the net apparent consideration and the fair market value to be paid by the Government to the owners as reflected even in the order dated 15th June, 2009 of the Division Bench of this Court; (iii) that the Appropriate Authority has not tendered the payment within the stipulated time as required under Section 269 UH of the I.T. Act and that the amount was deposited by the Central Government in the P.D. Account of Appropriate Authority prior to the passing of the impugned orders, cannot be considered as a valid deposit under Section 269 UG(1) and there was no tender as required under the law made by the Appropriate Authority to the owners and, therefore, the impugned orders stand abrogated. Under Section 269 UG the Appropriate Authority can deposit the amount in the P.D. Account only when a dispute arises as to apportionment of consideration [Section 269UG(2) ] or the person entitled to receive the consideration refuses to accept the payment or if there is any dispute as to the title to receive the amount of consideration [Section 269UG(3)]; (iv) that the mere fact that the Petitioners ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the entire valuation has been done in accordance with the terms of the agreement and in accordance with the Income Tax Act and the Rules framed thereunder; (ii) that all the three instances cited by the Appropriate Authority are comparable for the reasons given in the tabular remarks column submitted to this Court on behalf of the Respondents; (iii) that the four instances cited by the Petitioners were not comparable and that out of the four instances, sale instance Nos. 2 and 4 were not pressed by the Petitioners themselves; (iv) that the Appropriate Authority had arrived at the fair market value of the flat at Rs.1,200/per sq. ft of FSI after substantial discount of comparable sale rates and after considering all relevant material and hearing the parties; (vi) that the High Court may not exercise an appellate power while examining the correctness of the conclusions arrived at by the Appropriate Authority; (v) that if two views were possible, the High Court would not substitute its own conclusion for that of the Appropriate Authority; (vi) that Section 269 UH has no application to the facts of the present case in as much as the owners, though obliged, fail ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . and secondly, they were to receive a flat each, which obviously would have significant value attached to it. In other words, over and above the amount of Rs.20,00,000/which each of the owners were to get in hand, they were to be provided 25 WP2134andothers.sxw with a flat. As per the impugned orders, the amount payable to Pandharinath was stated to be Rs.18,68,430/and Rs.18,70,340/to Dattaram, after making necessary adjustments in the figure of Rs.20,00,000/. However, the question that begs an answer, particularly from the perspective of the owners, is what happened to the flat which the owners were to be provided under the Agreements? 20. It is contended on behalf of the Respondents that the Central Government is not in the business of construction and development. Even assuming that the Central Government was not in a position and therefore not required to provide the flats as per the terms and conditions of the agreements, surely, if the Appropriate Authority has exercised the power of preemptive purchase, they were required to compensate the owners in terms of the value of the flats which were to be provided to them under the agreements. There was a fair value attached to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount alone the impugned orders would stand vitiated. Apparent Consideration 25. In Pandharinath's case, in the Valuation Report the amount of Rs.20,00,000/which was to be paid in instalments by the Transferee, is shown as consideration and the amount of Rs.18,68,430/has been arrived at by taking the discounted value of Rs.20,00,000/in view of Section 269UA(b) of the IT Act and Rule 48(I) of the IT Rules. In the said amount of Rs.18,68,430/, the cost of the construction of flat of Rs.6,00,000/and further sum of Rs.72,000/(18 months rent @ Rs.4,000/per month) are added. This figure comes to Rs.25,40,430/(Rs.18,68,430/+Rs.6,00,000/+ 28 WP2134andothers.sxw Rs.72,000/= Rs.25,40, 430/). From this amount of Rs.25,40,430/, Rs.25,950/is deducted, being the scrap value @ Rs.30/per sq.ft. for 865 sq. ft. area of the existing structure, which comes to Rs.25,14,480/(Rs.25,40,430/minus Rs.25,950/=Rs.25,14,480/). The net consideration is accordingly shown as Rs.25,14,480/in the Valuation Report. 26. Thus, on the basis of this figure of Rs.25,14,480/, the rate of per sq.ft FSI has been worked out as Rs.932/(Rs.25,14,480/divided by 2698 sq.ft.). Though, in the Valuation Report, the net cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t works out to Rs.18,68,430/, though on the other hand, the impugned order categorically records " the apparent consideration in respect of the subject property is Rs.25,14,480/after making necessary adjustment in the agreement price of Rs.26,00,000/". Pertinently, the impugned order of the Appropriate Authority adopts the rate of Rs.932/per sq. ft. FSI as worked out by the Valuation Officer. We find that when the rate of Rs.932/per sq. ft. FSI has been accepted by the Appropriate Authority on the basis of net consideration of Rs.25,14,480/, there was no rational basis for the Appropriate Authority to reduce this figure to Rs.18,68,430/. 30. Similarly, in Dattaram's case, we find that when the rate of Rs.929/per sq. ft. FSI as per the Valuation Report has been accepted by the Appropriate Authority on the basis of net consideration of Rs.25,05,710/, there was no rational basis for the Appropriate Authority to reduce this figure to Rs.18,70,340/. 31. In our view therefore, there was complete non application of mind on the part of the Appropriate Authority in stating in the impugned order that the amount payable was Rs.18,68,430/when the apparent consideration was admittedly R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... kidney transplantation was duly considered but negatived inasmuch as the transplantation was done in June, 1994, and the agreement of sale was made in September, 1995. Pertinently, it was observed by the Supreme Court in the said case as under: " In the instant case, the appropriate authority did consider all the germane and relevant materials produced before it in the course of the proceedings and formed its opinion that there was understatement of consideration in the agreement by an amount more than 15 per cent of the fair market value." 36. The decision of the Apex Court in Union of India and others vs. Shatabadi Trading and Investment P. Ltd. (supra), is relied upon on behalf of the Respondents to contend that proceeding arising under article 226 of the Constitution of India are in the nature of judicial review and such review can be only in respect of the process of decision and not the decision itself. In the said case, the owner of the property did not challenge the order of the Appropriate Authority and accepted the amount of apparent consideration for the transfer as well as interest thereon without any protest and did not contest the matter in the High Court. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y within fifteen days of the service of such order on him. Subsection (3) of Section 269UE provides that in the event any person refuses or fails to comply with the provisions of subsection (2), the Appropriate Authority may take possession of the immovable property and may for that purpose use such force as may be necessary. Subsection (4) of section 269 UE provides that notwithstanding anything contained in subsection (2), the Appropriate Authority may, for the purpose of taking possession of any property referred to in subsection (1), requisition the services of any police officer to assist him and it shall be the duty of such officer to comply with such requisition. Section 269UF states that when an order for purchase of immovable property is made, the Central Government shall pay by way of consideration for such purchase, an amount equal to the amount of the apparent consideration. Section 269UG(1) lays down that the amount of consideration payable in accordance with the provisions of Section 269 UF shall be tendered to the person or persons entitled thereto, within a period of one month from the end of the month in which the immovable property concerned becomes vested in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble to the owners, in the facts of the present case, can it be said that the impugned orders has abrogated and the subject property stood revested in the owners? 42. The impugned orders in the last paragraph record as follows: "The payment by the Central Govt. will be made in accordance with the provisions of Section 269UF(1) read with section 269UG(1) of the IT Act within the stipulated period of one month subject to the transferor complying with the condition u/s 269UE(2) of surrendering or delivering the possession of the property to the Appropriate Authority or to any other person duly authorized by it in this behalf within 15 days of the service of this order on him". 43. The Appropriate Authority has thus suo moto decided not to tender the payment of consideration unless the owners hand over possession of the property. No reasons have been stated in the impugned orders in making this stipulation. In our view, in the facts of the present case, there was no such discretion vested in the Appropriate Authority and it was not permissible for the Appropriate Authority to make the handing over possession of the property by the owners as a condition precedent to the tende ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... either failure to tender the purchase price or failure to deposit the same with the Appropriate Authority by the Central Government. It is submitted that in the instant case, the purchase price has been deposited with the Appropriate Authority. It is contended that there was a dispute as to the "title" and therefore section 269 UG(3) would be applicable, which permits the making of the deposit, instead of tendering the amount to the owners. The submission urged is that the expression "title" used in section 269 UG (3) would include "possession" and since the owners had failed to deliver possession of the property, it is to be construed that there was a dispute as to "title". This contention on behalf of the Respondents cannot be countenanced, as it overlooks the fact that the expression "dispute" appearing in subsection (3) is not in context of "title", but "title to receive the amount of consideration". In the present case, it is undeniable that there was no dispute as regards the title of the owners to receive the amount of consideration. 47. Under subsections (2) and (3) of section 269 UG, it is only under three circumstances that it is permissible for the Central Government ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Appropriate Authority stood abrogated and the property was revested in the transferor in terms of subsection (1) of Section 269UH of the Act." 51. In Parasrampuria Estate Developers P. Ltd. vs. Members of Appropriate Authority (Supra), the Division Bench of this Court observed in para 10 as follows: "Apart from the above, in the present case, admittedly, the apparent consideration determined under the impugned order has not been tendered to the Petitioners and the same has been deposited in the account of the appropriate authority. The only reason given by the Respondents for not tendering the amount is that, on the date of purchase the building was incomplete and, therefore, the amount has not been tendered to the Petitioners. As held by the Apex Court in the case of Dr. A.K. Garg (2002) 256 ITR 660 (SC) it was mandatory on the part of the appropriate authority to tender the amount of apparent consideration within the period of limitation prescribed under the Act. Having purchased the flat under construction, it is not open to the appropriate authority to contend that there is no obligation to tender the apparent consideration till the flat is fully constructed. ...I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on Bench of Gujarat High Court observed as follows: "The recovery of possession of the property has not been made a ground under the statute itself for withholding the payment. On the contrary under Section 269 UE, the appropriate authority or any person duly authorized by the appropriate authority are empowered to take vacant possession of the property either on surrender by the occupants or by use of such force as may be necessary. The amount of consideration was not tendered within the time prescribed under Section 269UG and there was no ground for making deposit to the appropriate authority the consequence which has been provided under section 269UH would necessarily follow, namely, the order of purchase would stand abrogated and the immovable property stand reverted to the transferor on the expiry of the period in which the amount was to be tendered but has not been so tendered." 54. In view of the aforesaid discussion, in the facts of the present case, it would have to be held that the impugned orders stand abrogated and the property stood revested in the owners. 55. In arriving at the aforesaid conclusion we have also considered the judgments cited on behalf of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent to allow the petition. Moreover, having come to a finding that there was an inherent flaw in the Valuation Report, this exercise, in our opinion would not be warranted in the facts and circumstances of this case. 59. Before parting, we may refer to the decision in C.B. Gautam vs. Union of India 199 ITR 630, wherein, the Constitution Bench of the Apex Court took note of the averment in the affidavit filed on behalf of the Respondents therein. The affidavit stated that the following types of properties should not ordinarily be purchased: (a) cases of doubtful or disputed titles; (b) transactions by and with Government, SemiGovernment Organisations, Public Sector Undertakings, Universities etc.; (c) properties with bona fide tenancies of long standing; and (d) properties with too many restrictions on user. 60. In the present case, there were several restrictions in the agreements on the Transferee viz: (i) the Transferee was required to develop the property (ii) the Transferee was required to provide each of the owners an ownership flat of 988 sq.ft. this condition of providing the flats was made the essence of the contract (iii) the said flats were require ..... X X X X Extracts X X X X X X X X Extracts X X X X
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