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TMI Blog2013 (8) TMI 42X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act and therefore, continues to pass orders giving the same reasons. This itself makes the impugned order unsustainable - Reasons for exercise of preemptive right of purchase under Chapter XXC of the Act cannot be sustained as it is passed without considering the submissions of the petitioners - Decided in favour of Assessee. - Writ Petition No. 2435 of 2011 - - - Dated:- 30-7-2013 - Mohit S. Shah, C.J. And M. S. Sanklecha, JJ. For the Petitioners : Mr. Porus Kaka, Senior Advocate with Divesh Chawla and Ms. Vasanti B. Patel For the Respondent : Mr. Abhay Ahuja, Mr. J. D. Mistri, Sr. Advocate with Ms. Aasifa Khan JUDGMENT (Per M. S. Sanklecha, J.) Rule. By consent returnable forthwith. At the request of the Counsel for the parties matter taken up for final hearing. 2) By this petition under Article 226 of the Constitution of India the petitioners take exception to the order dated 8 July 2011 passed by the Appropriate Authority constituted under Chapter XXC of the Income Tax Act, 1961 ( the Act ). By the impugned order dated 8 July 2011 a property admeasuring 555 sq. yards together with super structure standing thereon being property bearing Plot No.70/P, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Complex, Sion Trombay Road, Bombay 71. 552 sq.ft (BUA) Rs. 9409 (per sq ft of BUA) 3 17821 24/02/95 Property located at Corporate Park, Bungalow/Unit/Premises No.7/G, Ground floor, Sion Trombay Road, Near Swastik Chamber, Chembur, Bombay7 2715 sq ft (BUA) Rs. 9794(per sq ft of BUA) 6) The petitioner filed their reply to the show cause notice dated 5 May 1995 and pointed out that the consideration of Rs.1.15 crores for the said property was a fair market value. In particular, it was pointed out that the said property was in occupation of a monthly tenant. Therefore, the said property could not be developed without vacating the tenant from the said property for which reason the petitioners would have to compensate the tenant resulting in increasing the cost of the said property. Further, it was pointed out that the three instances of purchase relied upon in the show cause notice were not comparable, for the reason that the sale instances were in respect of properties which were ready property for sale and further all the three properties were situated on the main Sion Trombay Road as against that the said property which wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd finally disposed of on 10 August 2009. This Court by order dated 10 August 2009, set aside the order of the Appropriate Authority dated 22 May 1995 and restored the matter to Appropriate Authority for fresh disposal. In fact, while remanding the case to the Appropriate Authority this Court made certain observations with regard to the findings of the Appropriate Authority in its order dated 22 May 1995. 9) This Court held that the Appropriate Authority has not given any reason to support its acceptance of valuation report by its Valuation Officer in the light of the petitioner submission, while concluding that the cost of settling the tenant was of Rs.4.34 lacs. Thus, the Appropriate Authority was directed to properly compute the cost of settling the tenant. 10) Further, this Court held that three sale instances relied upon by the Appropriate Authority were not comparable for the reason that two out of the three were of commercial premises and in any event all the three instances being relied upon by the respondents are abutting the main Sion Trombay Road. As against that the said property is situated in the interior and not abutting to any main road as was evident from Googl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... worked out at Rs.2.12 crores which exceeds apparent consideration by over 15% and thus, the appropriate authority exercised its right for purchase under Section 269 UD(1) of the Act. According to the petitioner the aforesaid order of the Appropriate Authority dated 3 February 2010 did not consider the valuation report of Dr. Roshan Nanavati nor did it follow the directions given by this Court in the order dated 10 August 2009. Therefore, the petitioners challenged the order dated 3 February 2010 by filing Writ Petition No.1811 of 2010 in this Court. The seller of the said property also filed Writ Petition No.2101 of 2010 in this Court challenging the order of the Appropriate Authority dated 3 February 2010. Both the above petitions were heard together by this Court and on 6 June 2011 by a common order both the petitions were allowed and the order dated 3 February 2010 of the Appropriate Authority was set aside. The Appropriate Authority was further directed to pass a fresh order in accordance with the directions given by this Court in its order dated 10 August 2009 in Writ Petition No.1016 of 1995 and after giving the petitioners in both the writ petitions a personal hearing. 15 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nces relied upon by the petitioners in particular instance bearing No.16669 is not comparable. Thereafter the Appropriate Authority passed the order dated 3 February 2010. The above order dated 3 February 2010 of the Appellate Authority was also set aside by the order dated 6 June 2011 of this Court and remanded for a fresh adjudication with a direction to follow the earlier order of this Court dated 10 August 2009. In spite of the above, the Appropriate Authority has in the impugned order refused to carry out the directions of this Court and once again in mechanical manner given the same reasons to conclude that the said property was under valued. b) On merits it was submitted that the report dated 5 January 2010 of Dr. Roshan Nanavati relied upon by the petitioners was completely ignored while passing the impugned order. The report dated 5 January 2010 very categorically states that the tenant for the purpose of vacating his premises would normally demand 33% to 50 % more area than the area in his possession besides some cash consideration. In the report, in fact, reliance was placed upon certain Court decisions to contend that 33 % more along with open space is being given t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uthority under Chapter XXC of the Act as if this Court is sitting in on the impugned order. This, according to him is more so as the view taken by the Appropriate Authority is a possible view. In support of the Court not exercising its writ jurisdiction reliance was placed upon the decision of the Apex Court in the matter of Appropriate Authority and another vs. Smt. Sudha Patil and another 235 ITR 118. b) So far as the cost of resettling the tenant is concerned, it was submitted that the impugned order has concluded that the effective cost for the resettling the tenant would come to Rs.55.02 lacs. This was so as the fair market value of 724 sq. ft. allotted to the tenant is being computed at Rs.7000 per sq. ft. Therefore, it is not correct on the part of the petitioner to state that the impugned order has taken the costs of settling tenant at Rs.4,34,400/; and c) It was submitted that the value of any commercial property would be at least 100% more than the value of the residential property. In that view of the matter the instances of comparable property given by the petitioners were all in respect of residential properties while the said property falls within the commercial z ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eedings not later than six months from today . In spite of the aforesaid directions which were again reiterated in the order dated 6 June 2011 while setting aside the order dated 3 February 2012, the Appropriate Authority has ignored the directions of this Court with impunity by giving the same reasons in support of acquisition of the said property. 21) We find that the order dated 22 May 1995 (which was set aside by order of this Court dated 10 August 2009) annexed at ExhibitH to the petition and in particular Annexure A thereto wherein sale instance relied upon by the petitioners have been reproduced. This Annexure A lists 15 properties giving details of the date of agreement as well as remarks of the Appropriate Authority why the same is not comparable to the said property. We find that the same reasons which have been set out therein are repeated in impugned order at Annexure B thereto in respect of all the 15 properties. In particular attention is invited to Sr. No.15 bearing Case No.16669 Annexure B to the impugned order. The reasons are identical. For the sake of comparison, we reproduce the order dated 22 May 1995 and Annexure B to the impugned order as under:::: ANNE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsferee Rs.5,00,000/towards cost of construction. If in the process of development of the balance FSI any damage was caused to the existing structure, the developer was responsible for the same. The development was required to be completed within 18 months from the date of agreement and if he failed to do so the owner was entitled to liquidate damages of Rs.2000/per day from the developer. The property was purchased u/s.269 UD(1) by the order dated 24/02/1995 wherein the FMV of the property was determined at Rs.1,74,93.600/@ Rs.3,700/per sq. ft. of FSI. was auctioned by the Department on 26/04/1995 for Rs.2,40,00,000 i. e. @ Rs.5,076/per sq.ft. of FSI. Thus the aforesaid comparison of the two orders would itself indicate that it was a cut and paste job and there is no independent application of mind by the Appropriate Authority while passing the impugned order. This notwithstanding the fact that in the order dated 10 August 2009 in Writ Petition No.1016 of 1995 this Court has specifically while setting aside the order dated 22 May 2005 of the Appropriate Authority had specifically directed the Appropriate Authority to give good reasons why sale instance bearing case No.16 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... settling the tenant was not Rs.4.34 lacs but Rs.55.02 lacs. This on the ground that the fair market value of 724 per sq. ft. of FSI to be allocated to the tenant would be Rs.7000/per sq. ft. However, the aforesaid costs of Rs.55.02 lacs is not taken into account for arriving at consideration for the purchase of the said property nor is it taken to arrive at the fair market value of the said property. In these circumstances, the exercise of right of preemptive purchase under Section 269 UD(1) of Chapter XXC of the Act is not warranted. 26) We find that the Appropriate Authority has disregarded the directions of this Court's orders dated 10 August 2009 and 06 June 2011, while passing the impugned order. The Appropriate Authority has completely ignored the directions of this Court and continued to give the same reasons which this Court had found not good enough to sustain the acquisition of the said property. In the above circumstances, it appears to us that the Appropriate Authority has no other reason to justify its action for passing an order under Section 269UD(1) of the Act and therefore, continues to pass orders giving the same reasons. This itself makes the impugned order unsu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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