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TMI Blog1997 (4) TMI 47X X X X Extracts X X X X X X X X Extracts X X X X ..... f the said agreement has been produced as annexure "A" to this petition. Pursuant to the agreement annexure "A", the petitioners filed a statement as required under sub-section (3) of section 269UC of Chapter XX-C of the Act, in Form No. 37-I under rule 48L of the Income-tax Rules, 1962 (hereinafter referred to as "the Rules"), before the second respondent on May 12, 1989, seeking grant of a "no objection certificate" for transfer of the land in terms of sub-section (3) of section 269UL of the Act. The second respondent by means of his communication annexure-D dated July 19, 1989, rejected the statement filed by the petitioners as defective. Aggrieved by the said order, this petition has been filed. Sri K. R. Prasad, learned counsel appearing for the petitioners, submitted that the impugned order, annexure "D", is totally illegal and suffers from errors apparent on the face of the records, inasmuch as the said order has been passed in total disregard of the provisions contained in Chapter XX-C of the Act. According to learned counsel, all the five reasons assigned in the impugned order are totally extraneous to the power conferred on the second respondent to consider the questi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioners in respect of the total area mentioned in Form No. 37-I and on that basis the total consideration was mentioned in Form No. 37-I as Rs. 2,49,90,000. Therefore, learned counsel would submit that there was no ambiguity or uncertainty in so far as the total sale consideration fixed for the sale of the property in question and, therefore, the reasons assigned in annexure "D" that since the plans have not been sanctioned the extent of built up area is not known and, therefore, the apparent sale consideration which depends only on the built-up area cannot be determined was erroneous in law. Learned counsel would further submit that since the total built up area that the second party is required to construct on the land in question has been specified and out of that it was agreed that the second petitioner must hand over 21 per cent. of the built-up area to the first petitioner which would be the consideration for sale of the land in question to the second petitioner. The view taken by the second respondent that the apparent sale consideration could not be determined at that stage was totally misconceived. He further submitted that the second reason assigned in the impugned or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 188 ITR 656 (Delhi) ; (3) Dwarkanath Chatterjee v. Union of India [1995] 213 ITR 470 (Cal) ; (4) Tanvi Trading and Credits P. Ltd. v. Appropriate Authority [1991] 188 ITR 623 (Delhi) ; (5) Appropriate Authority v. Tanvi Trading and Credits P. Ltd. [1991] 191 ITR 307 (SC) ; (6) J. Gala Enterprises Estate and Investments P. Ltd. v. W. Hassan, CIT [1995] 216 ITR 110 (Bom) ; (7) Ranchhodbhai Galabhai Patel v. Union of India [1996] 219 ITR 427 (Guj) and (8) Gordhandas Purshottamdas Patel v. Appropriate Authority [1996] 217 ITR 62 (Guj). Sri M. V. Seshachala, learned standing counsel appearing for the respondents, supported the order impugned. He submitted that the second respondent was fully justified in rejecting the statement filed by the petitioners for the reasons set out in the order, annexure "D". According to Sri Seshachala, since the sanctioned plan has not been issued by the authorities, it was not possible to determine the total built-up area proposed to be constructed on the land in question, and in those circumstances, the second respondent was justified in taking the view that unless the plan is sanctioned, the built-up area cannot be ascertained and, therefore, the appa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 269UD of the Act confers power on the appropriate authority to purchase the property agreed to be sold in respect of which a statement has been filed as provided under section 269UC of the Act by the Central Government. It is useful to extract section 269UD of the Act, which reads thus : "269UD. Order by appropriate authority for purchase by Central Government of immovable property.--(1) Subject to the provisions of sub-sections (1A) and (1B), the appropriate authority, after the receipt of the statement under sub-section (3) of section 269UC in respect of any immovable property may, notwithstanding anything contained in any other law or any instrument or any agreement for the time being in force, make an order for the purchase by the Central Government of such immovable property at an amount equal to the amount of apparent consideration : Provided that no such order shall be made in respect of any immovable property after the expiration of a period of two months from the end of the month in which the statement referred to in section 269UC in respect of such property is received by the appropriate authority : Provided further that where the statement referred to in sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of section 269UD is made by the appropriate authority in respect of an immovable property referred to in sub-clause (i) of clause (d) of section 269UA, such property shall, on the date of such order, vest in the Central Government in terms of the agreement for transfer referred to in sub-section (1) of section 269UC, etc. Section 269UF of the Act provides that where an order for the purchase of any immovable property by the Central Government is made under sub-section (1) of section 269UD, the Central Government shall pay, by way of consideration for such purchase, an amount equal to the amount of the apparent consideration. Sub-section (1) of section 269UG of the Act makes it mandatory on the part of the Central Government to deposit the amount of consideration payable in accordance with the provisions of section 269UF 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 vested in the Central Government under sub-section (1), or, as the case may be, sub-section (6) of section 269UE. It is useful to extract sub-section (1) of section 269UG of the Act, which reads as hereunder : "(1) The a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore, the value of the built-up area was required to be discounted for the said period ; (3) Unless and until clearance is given by the urban land ceiling authorities, the transfer of the land was not legally permissible and, therefore, submission of the statement in Form No. 37-I without the clearance of the urban land ceiling and regulations authorities was, therefore, premature ; (4) The amount of apparent consideration indicated was on the basis of handing over of 21 per cent. of the total constructed area to the transferor and neither the agreement nor the statement in Form No. 37-I indicates the firm figure regarding the minimum built-up area which will be provided by the transferee to the transferor ; and in the absence of a sanctioned plan, the consideration remains vague ; and (5) the letter, annexure "C", dated July 11, 1989, written by the petitioners refers to minor variation in the development rights on the land in question ; and, therefore, having regard to the built-up area proposed to be constructed on the land in question and the road width, it was uncertain as to whether the Bangalore development authority would be in a position to sanction group housing and, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9 ITR 530. In the said decision, the Supreme Court has pointed out that the provisions of Chapter XX-C can be resorted to only where there is a significant undervaluation of the 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, and that the intending seller and the intending purchaser should be given an opportunity to show cause against the compulsory purchase order to be made. At pages 553 and 554, the Supreme Court has observed as follows : "In our opinion, before an order for compulsory purchase is made under section 269UD, the intending purchaser and the intending 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. We have further pointed o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns) Act are not likely to grant permission and, therefore, the agreement entered into between the vendor and the vendee for transfer of the immovable property may become void ; the authorities of the Bangalore City Corporation or the Bangalore Development Authority may not sanction the plan for any reason ; and the value of the built-up area was required to be discounted as the agreement provides that the vendee should hand over the possession of 21 per cent. of the built-up area after four years nine months to the vendor ; the income-tax particulars of the transferor have not been indicated in column 1(v) of the annexure to the statement in Form No. 37-I, etc., are totally irrelevant and extraneous for exercise of power for the purpose of pre-emptive purchase to be exercised by the appropriate authority under Chapter XX-C of the Act. The only relevant consideration the appropriate authority is required to consider is as to whether the apparent sale consideration shown in the agreement is the fair market value of the property agreed to be sold or is undervalued by 15 per cent. or more than the apparent consideration shown in the agreement. Therefore, the only investigation the appr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the same was again treated as a price in respect of the said 21 per cent. of the total area. It is useful to extract the relevant provisions of the agreement, which read as hereunder : "It is agreed that for the purpose of calculating the price and/or rate of such duly constructed built up area including the cost of land and cost of construction by way of saleable area the rate of Rs. 250 per sq. ft. will be treated as a price in respect of the said 21 per cent. of the total area." Further, in Form No. 37-I, a copy of which has been produced as annexure "B", the apparent consideration for the transfer of the property agreed to be sold on the basis of the total area originally understood between the parties was mentioned as Rs. 2,49,90,000. However, subsequently, by means of a letter dated July 11, 1989, a copy of which has been produced as annexure "C", the second-respondent was informed by the petitioners that there was some mistake with regard to the total area of the land and it was only to the extent of 5 acres 14.5 guntas, the second petitioner acquired the developmental rights and, therefore, the total price at which the land was agreed to be sold works out to Rs. 2,27 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tally erroneous in law and plainly unsustainable. This view of mine is supported by the decision of the Delhi High Court in the case of Tanvi Trading and Credits P. Ltd. v. Appropriate Authority, [1991] 188 ITR 623. In the said decision, the Division Bench of the Delhi High Court while considering the order similar to the one which is under challenge in this petition has taken the view that the said order is unsustainable in law. At page 628, the court has observed as follows : "As we read section 269UD, it is clear that the only right which it confers on the appropriate authority is to enable it to make an order for purchase of the immovable property at an amount equal to the amount of the apparent consideration. Furthermore, the first proviso stipulates the time within which such an order can be passed. Section 269UD, there fore, contains the pre-emptive right of purchase by the Central Government. The said provision does not give jurisdiction to the appropriate authority to adjudicate upon the legality of the transaction which is proposed to be entered into by the applicant. It is to be remembered that Chapter XX-C was incorporated in an effort to curb sales of immovable prope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1) for purchase, is passed and the period within which such an order can be passed has expired, then no order for purchase can at all be passed." Further, at page 630, it is observed as follows : "The certificate issued under section 269UL would, in effect, only indicate that the Government is not interested in purchasing the property. The certificate so issued does not pronounce on the legality or validity of the transaction. If the transaction is otherwise illegal or invalid, it will be for some other authority, in another forum, to decide on the same. As far as the appropriate authority is concerned, the certificate which is issued has relation only to the question whether the Government is interested in purchasing the property or not." The said decision was confirmed by the Supreme Court in the case of Appropriate Authority v. Tanvi Trading and Credits P. Ltd. [1991] 191 ITR 307. The Supreme Court while rejecting the special leave petition, at page 308, has observed thus : "We agree that two alternatives are open under the scheme of the legislation : (i) the Union of India through the appropriate authority could buy the property, or (ii) in the event of its decision not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th in which case the immovable property concerned becomes vested in the Central Government. If the Central Government fails to tender or deposit the whole or any part of the amount of consideration required to be tendered thereunder within the specified period, the order of purchase shall stand abrogated and the immovable property shall stand revested in the transferor by virtue of the provisions of section 269UH. It comes to this that in case the appropriate authority does not make an order for the purchase of the property by the Central Government or where the order stands abrogated, the appropriate authority is obliged under section 269UL to issue a certificate that it has no objection to the transfer of the immovable property for the consideration stated in the agreement. A bare perusal of the abovesaid provisions of the Act indicates that the jurisdiction of the appropriate authority is only limited to either passing an order within the specified period for purchase of property by the Central Government for consideration recorded in the agreement or issuing a no objection certificate for transfer at that consideration. While considering the statement in Form No. 37-I, the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o given to sub-section (1) of section 269UD of the Act further provides that no such order shall be made as contemplated under sub-section (1) of section 269UD of the Act proposing to purchase the property at an amount equal to the amount of apparent consideration shown in the agreement, after the expiration of the period of two months from the end of the month in which the statement referred to in section 269UC in respect of such property is received by the appropriate authority. The language employed in the proviso to sub-section (1) of section 269UD of the Act is explicit in terms and it is in the nature of an order of injunction or an order prohibiting the appropriate authority from making any order under sub-section (1) of section 269UD of the Act, after the expiry of the period fixed. Further, sub-section (1) of section 269UF of the Act makes it obligatory on the part of the Central Government to pay an amount equal to the amount of apparent consideration in respect of an immovable property in respect of which an order for purchase has been made under sub-section (1) of section 269UD of the Act. Sub-section (1) of section 269UG of the Act makes it mandatory for the Central Go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the matter afresh it would cause serious financial loss to the parties as by passage of time the market value of the property would have gone up considerably and it would be advantageous to the Central Government to purchase the property to the detriment of the rights of the vendor and the vendee. The appropriate authority being a creature of the statute should only function within the four corners of the power conferred on it under the statute and, therefore, if the appropriate authority was required to do a particular thing in a particular manner and within the time specified, it cannot be permitted to do a thing which is not permitted under law by remitting the matter for fresh consideration. The several decisions referred to above by me also clearly support the view I have taken. In the case of Tanvi Trading and Credits P. Ltd. v. Appropriate Authority [1991] 188 ITR 623 (Delhi), the court has held as follows : ". . . where no order for purchase has been passed, then the appropriate authority shall issue a certificate of no objection referred to in sub-section (1) of section 269UL." Further, the observations of the Supreme Court in the case of Tanvi Trading and Credits P. L ..... X X X X Extracts X X X X X X X X Extracts X X X X
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