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TMI Blog1999 (9) TMI 83X X X X Extracts X X X X X X X X Extracts X X X X ..... that are material and relevant for deciding the present petition are that on June 14, 1989, the petitioner entered into an agreement to sell the immovable property to Trambak Holdings Private Limited, a company incorporated under the Companies Act. By that agreement, the petitioner agreed to transfer the property for consideration of Rs. 21,50,000. Out of the total amount of consideration, the amount of Rs. 3,01,000 was to be paid on the date of the agreement and the balance amount of consideration was to be paid within 15 days of getting the necessary approval or no objection from the appropriate authority appointed under Chapter XX-C of the Income-tax Act. It transpires that pursuant to this agreement, on June 21, 1989, an application in Form No. 37-I prescribed by the Income-tax Rules, 1962, was submitted to the appropriate authority, and on August 29, 1989, the appropriate authority made an order for compulsory purchase of the property and fixed the apparent consideration as observed above at Rs. 21,14,684. In other words, from the amount of consideration mentioned in the agreement an amount of Rs. 35,316 was discounted. It is this discounting, which is challenged in the prese ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quired to be paid by the Central Government to the transferee is the amount of apparent consideration. Learned counsel relying on the definition of the term 'apparent consideration" appearing in section 269UA(b) submits that in any case where any part of consideration is payable at a date subsequent to the date of the agreement for sale, the value of the consideration payable after the date of the agreement is to be deemed to be the discounted value of such consideration, as on the date of such agreement for transfer, determined by adopting such rate of interest as may be prescribed in this behalf. According to learned counsel this rate of interest is prescribed as 8 per cent. under the rules framed under the Act. According to learned counsel, in the present case as the balance amount of consideration was to be paid after the date of the agreement, therefore, in terms of the provisions of the Act the amount had to be discounted. Learned counsel in support of this proposition relies on the judgment of the Division Bench of this court in Smt. Vimla Devi G. Maheshwari v. S. K. Laul [1994] 208 ITR 734. Learned counsel submits that the judgment of the Division Bench of this court in Vim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deration payable after such date shall be deemed to be the discounted value of such consideration, as on the date of such agreement for transfer, determined by adopting such rate of interest as may be prescribed in this behalf ;" It is thus clear from the perusal of the above definition that the amount of apparent consideration is the amount of consideration, which is mentioned in the agreement. However, when the agreement does not contemplate payment of the whole of the amount of consideration on the date of the agreement itself, but contemplates payment of balance amount of consideration at a date subsequent to the date of the agreement, then the amount of apparent consideration has to be arrived at by making deduction from the amount of consideration mentioned in the agreement. it is, therefore, necessary to see as to what are the stipulations in the agreement between the parties in this regard. It is clause 1 and clause 2 of the agreement between the parties dated June 14, 1989, which are relevant for this purpose, which read as under : "(1) The vendor shall assign and transfer and the purchaser shall take over and acquire from the vendor the said shares and as incidental t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... seller must be given a reasonable opportunity of showing cause against an order for compulsory purchase being made by the appropriate authority concerned. As we have already pointed out, the provisions of Chapter XX-C can be resorted to only where there is a significant undervaluation of property to the extent of 15 per cent. or more in the agreement of sale, as evidenced by the apparent consideration being lower than the fair market value by 15 per cent. or more." It is thus clear that when an application in Form No. 37-1 is submitted to the appropriate authority, the appropriate authority at that juncture will have first to arrive at the amount of apparent consideration, then to compare that amount with the fair market value of the property and it is only thereafter, of course, after granting an opportunity of being heard to the parties concerned, that it can make an order for compulsory purchase of the property. Thus, it is clear that the appropriate authority has to arrive at the amount of apparent consideration before it decides finally to purchase the property. It is, therefore, obvious that the determination of the amount of apparent consideration has no connection with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd in the present case, shows that the clauses are almost identical, except that in the present case the balance amount of consideration was to be paid within 15 days of the grant of no objection and as per the agreement that was considered in Vimla Devi's case [1994] 208 ITR 734 (Bom), that payment was to be made within 30 days of the grant of no objection. The Division Bench after considering the above quoted clauses in the agreement and the definition of the term "apparent consideration" has observed thus : "In the present case, on a perusal of clauses 3 and 11 of the agreement, we find that under the agreement the sum of Rs. 2 lakhs is paid on or before the execution of the agreement while the balance of Rs. 21 lakhs is to be paid within 30 days from the receipt of the no objection letter in respect of Form No. 37-I. This clearly prescribes a date for payment which is subsequent to the date of the agreement. The contention of Mr. Dastur that the exact (late must be spelt out in the agreement itself does not appeal to us. So long as the agreement clearly provides that any part of the consideration is to be paid at a date later than the date of the agreement and such date is ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 days has been properly calculated and if that is the basis then Rs. 80,00,000 have been properly discounted under section 269UA(b) of the said Act as stated above. Further, the constitutional validity of the Act has also been upheld by the Supreme Court in the case of C. B. Gautam [1993] 199 ITR 530, As regards the said contention. Mr. Dastur contends that the writ petitions are pending in this court. However, the petitioner has not laid the foundation of her challenge to the constitutionality of section 269UA(b). We further find that this court considered in its judgment, in the case of Mrs. Samira Parkar referred to above, clauses in the agreement, which are identical to the one which are in the present case and the Division Bench in paragraph 7 of the judgment observes as follows : "Mr. Dada next contended that the appropriate authority has not given the basis for calculating the deferred value of Rs. 29,81,504. We do not see any merit in the said contention. Under the above agreement, the total consideration was Rs. 30 lakhs. Rs. 23 lakhs was paid on or before September 10, 1993, and Rs. 7 lakhs was payable only after the expiry of 15 days from the receipt of NOC under Ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ands abrogated and the second challenge on behalf of the transferor was about the discounted value. It is obvious that it would be necessary to consider the second challenge only, in case the court holds that the purchase is not abrogated. Because, in the event the contention that the purchase order is abrogated is accepted, then there is no need to consider the second challenge and, therefore, learned counsel appearing for the respondents submitted that the judgment of this court in Shrichand Raheja's case [1995] 213 ITR 33 does not survive. Learned counsel appearing for the petitioner, on the other hand, relying on the judgment of the Chancery Division in the case of Curtis Moffat Limited v. Wheeler, [1929] Ch 224, submitted that the judgment of the Division Bench in Writ Petition No. 797 of 1994 has not been set aside by the Supreme Court and therefore it operates as binding precedent. We have some doubt whether as a result of the judgment of the Supreme Court referred to above dated February 17, 1995, the judgment of this court in Shrichand Raheja's case [1995] 213 ITR 33, would operate as a binding precedent or not ? However, in our opinion, it is not necessary for us to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relied on by the Tribunal not to follow the said decision is that it had been rendered by this court while dismissing some special leave petitions. This is a wholly untenable ground. The special leave petitions were not dismissed without reasons. This court had given reasons for dismissing the special leave petitions. When such reasons are given the decision becomes one which attracts article 141 of the Constitution which provides that the law declared by the Supreme Court shall be binding on all the courts within the territory of India." Thus, in our opinion, in view of the order passed by the Supreme Court referred to above the judgment of this court in Vimla Devi's case [1994] 208 ITR 734, is binding on us, because the reasons given by this court in that judgment have been approved by the Supreme Court specifically. We further find that the terms of the agreement which was considered by this court in its judgment in Vimla Devi's case [1994] 208 ITR 734, as also in its judgment in Mona Pradhan's case, as also in its judgment in Smt. Samira Parkar's case are almost identical to the terms of the agreement in the present case, whereas the terms of the agreement which were consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome-tax Act. That petition was transferred to the Supreme Court and it was decided by the Supreme Court. The Supreme Court by its judgment in C.B. Gautam's case [1993] 199 ITR 530, has upheld the constitutional validity of Chapter XX-C of the Income-tax Act. In view of the provisions of article 141 of the Constitution of India, the judgment of the Supreme Court holding the provisions of Chapter XX-C of the Income-tax Act to be constitutionally valid is binding on this court. Therefore, it is not possible for this court to entertain any challenge to the constitutional validity of any of the provisions contained in Chapter XX-C in view of the judgment of the Supreme Court in C. B. Gautam's case [1993] 199 ITR 530. In our opinion, the observations of the Supreme Court in its judgment in Kesho Ram and Co. v. Union of India [1989] 3 SCC 151, in this regard are pertinent. The Supreme Court has observed : "Finality in litigation and public policy both require that a litigant should not be permitted to challenge validity of the provisions of the Act or notification at different times on different grounds. Once petitioners' challenge to section 3 and the impugned notification was consider ..... X X X X Extracts X X X X X X X X Extracts X X X X
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