9911796707
TMI Blog2000 (3) TMI 44X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 7, No. 110, Mahatma Gandhi Road, Chennai-34, and super built up area of 6,700 sq. ft. in the third floor of the building known as "Prakash Presidium". The petitioner has entered into an agreement with Banque Nationale de Paris, a body corporate incorporated under the laws of France and having its office at "French Bank Building", Mumbai, on June 4 1997, for the sale of the property to the said Banque Nationale de Paris, for a total consideration of Rs. 3,23,27,500. The relevant terms of the agreement are as under : "The sale consideration of Rs. 3,23,27,500 will be paid by the purchaser to the vendor in the following manner : (a) A sum of Rs. 5,00,000 by means of cheque number 071267 dated April 7, 1997, drawn on B. N. P. Bombay, before the execution of the agreement the receipt of which the vendor herein admits and acknowledges ; (b) The balance sum of Rs. 3,18,27,500 to be paid at the time of lodgement of the sale deed for registration with the Registrar of Assurances. Subject to the vendor performing the other terms of the agreement, the purchase shall be completed by the purchaser in all respects within 15 days from the date of receipt of the required certificate gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... certificate" had been granted, it would have been granted on the same date and hence in terms of clause 3 of the agreement, the balance of sale consideration of Rs. 3,18,27,500 was payable on or before October 28, 1997. It is stated that the appropriate authority has paid the sale consideration only in November, 1997, and in spite of the above said payment, the appropriate authority has discounted the sale consideration which is not correct in law. It is stated that the object of discounting was to arrive at the actual amount that would be payable by the transferee, if the transfer takes place in accordance with the agreement entered into between the parties and it is not open to the Government of India to secure better terms than the terms of the agreement and seek to reduce the amount of consideration or acquire the property at a lower price. It is, therefore, stated that the provisions which permit the discounting of the sale value where the dates of payment fall beyond the date of agreement for transfer are ultra vires, and they are violative of his right to hold the property. It is also stated that the definition of "apparent consideration" in clause (b) of section 269UA of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plain reading of clause (b) of section 269UA of the Income-tax Act, discloses that where a part of the consideration is payable as on any date falling after the date of agreement for transfer, the value for such consideration as on the date of such agreement for transfer should be determined by adopting the rate of interest prescribed in rule 48-I of the Income-tax Rules and the discounting from the date of agreement is justified in law. Learned senior counsel for the Department relied upon the decision of the Gujarat High Court in Pradip Ramanlal Sheth v. Union of India [1993] 204 ITR 866, and also the decision of the Bombay High Court in Smt. Vimla Devi G. Maheshwari v. S. K. Laul [1994] 208 ITR 734. I have carefully considered the submission of learned senior, counsel on both sides, Section 269UA of the Income-tax Act, defines the expression "apparent consideration" and the section, in so far as it is relevant for the purpose of the case, reads as follows : " ' apparent consideration'--- (1) in relation to any immovable property in respect of which an agreement for transfer is made, being immovable property of the nature referred to in sub-clause (i) of clause (d), means-- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he total consideration payable by the Central Government as the money which is due to be paid on the future date is paid earlier. The concept of discount is not a peculiar concept. It is a common expression in commercial circles. In the context of Chapter XX-C, the expression "discount" is employed to denote that what is due on a future date is paid earlier, and consequently a certain deduction is warranted at the time of tender of payment of the sale consideration and by the process of discount the transferor does not get undue advantage by the pre-payment of apparent consideration and a rough and ready measure is adopted to prevent the unfair advantage that may accrue to the seller and by discounting the transferor is placed in the same position, as far as possible, what he would have received by way of sale consideration, if the agreement of sale had gone through. I hold that discounting permitted under the provisions of section 269UA(b) or section 269UA of the Act is not violative of the provisions of the Constitution. I find that there is a conflict of view on the question regarding the starting point for discounting the sale consideration. Does it begin from the date of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt. However, the Bombay High Court in a subsequent decision, in Shrichand Raheja v. S. C. Prasad, Appropriate Authority [1995] 213 ITR 33, has held that the discounting has to be done only for the period commencing from the date on which the payment was tendered to the transferor and ending with the date on which the balance amount is payable subsequent to that date. The reasoning of the Bombay High Court is as follows : "The principle of discounting is well-known and regularly applied in accounting. In plain words, discount means the present value of payment due in future. The word 'discount' in the Oxford English Dictionary means an abatement or deduction from the amount or from the gross reckoning or value of anything and is used in commerce to mean a deduction made for payment before it is due. Discount is primarily a rebate and such allowance is reduction of the total sum payable. It is subtracted from the amount in consideration of pre-payment before the due date. Stroud's Judicial Dictionary, fourth edition, sets out that the discount has no technical or universal meaning, and perhaps its most common meaning is that it is equivalent to the payment of interest in advance. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ussion as to whether it is permissible to have a discounting from the date of the purchase order. Under section 269UD(1) of the Income-tax Act, the title of the transferor is divested on the passing of the order under the said section and under the general law, the transferor is allowed to enjoy his property till the date of the passing of the order. After the order of transfer, the transferor is granted fifteen days time to surrender and deliver possession of the property to the appropriate authority from the date of passing of the order under section 269UD(1) of the Act. Therefore, till the date of passing of the order under section 269UD of the Act, the transferor continues to be the owner of the property and as owner of the property, he is entitled to enjoy the property, though an agreement of sale was entered into. Under the general law, the transferor is allowed to enjoy the benefits that flow from the possession of the property till his title is divested and is equally well settled in the absence of an express distinct stipulation to the contrary between the parties to the contract, he is not entitled to enjoy the benefits that flow from the possession of the purchase money. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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