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TMI Blog2007 (10) TMI 289X X X X Extracts X X X X X X X X Extracts X X X X ..... ion. Secondly, even on the merits the impugned order passed under section 269UD(1) of the Act suffers from serious infirmities and hence the said order is liable to be quashed and set aside. According to the Revenue, actual transfer of the flat in question took place after the provisions of Chapter XX-C came into force and, therefore, the impugned order is validly passed under Chapter XX-C of the Act. 3. The facts relevant for the present writ petition are that, some time in August, 1986, the petitioners approached the Belle View Co-operative Housing Society seeking no objection certificate (NOC) for transfer of the flat in question in favour of the petitioners. On August 24, 1986, the society accorded its approval for transfer of the flat in question in favour of the petitioners. 4. Thereupon, on August 30, 1986, the petitioners entered into an agreement for purchase of the flat in question from the member for a consideration of Rs. 15,30,000. In the agreement it is recorded that out of the total consideration, the petitioners have paid Rs. 6,00,000 to the member on or before the execution of the said agreement and that the balance consideration of Rs. 9,30,000 would be paid by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) of the Act for purchase of the flat in question. Challenging the said order, the petitioners filed Writ Petition No. 30 of 1987 in this court which was admitted on February 13, 1987, and by way of interim relief, implementation of the purchase order dated December 12, 1986, was stayed. 9. Thereafter, by an ex parte order dated December 16, 1992, this court, on the basis of a statement made by counsel for the Revenue set aside the purchase order dated December 12, 1986, and remanded the matter back to the appropriate authority for deciding the matter afresh in the light of the decision of the apex court in the case of C. B. Gautam v. Union of India [1993] 199 ITR 530. This court further ordered that in the facts of the case, the statement in Form No. 37-I submitted by the petitioners on October 14, 1986, shall be treated as if it was filed on that date, i.e., December 16, 1992. 10. In the meantime, the competent authority constituted under Chapter XX-A of the Act had issued a notice on July 2, 1987, under section 269D(1) for acquisition of the flat in question. By their reply dated October 7, 1987, the petitioners submitted that the sale instances set out in the said notice ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id order, as also the constitutional validity of rule 48L of the 1962 Rules, the present petition is filed. 15. Before dealing with the rival contentions, we may quote the relevant provisions in Chapter XX-A of the Act. "Chapter XX-A Acquisition of immovable properties in certain cases of transfer to counteract evasion of tax 269A. Definitions.- In this Chapter, unless the context otherwise requires,-. . . (e) 'immovable property' means,- (i) any land or any building or part of a building, and includes, where any land or any building or part of a building is transferred together with any machinery, plant, furniture, fittings or other things, such machinery, plant, furniture, fittings or other things also. Explanation.- For the purposes of this sub-clause, land, building, part of a building, machinery, plant, furniture, fittings and other things include any rights therein ; (ii) any rights of the nature referred to in clause (b) of sub-section (1) of section 269AB ; . . . (h) 'transfer',- (i) in relation to any immovable property referred to in sub-clause (i) of clause (e), means transfer of such property by way of sale or exchange or lease for a term of not less than twel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hority, in such manner and within such time as may be prescribed, by each of the parties to such transaction or by any of the parties to such transaction acting on behalf of himself and on behalf of the other parties. 269RR. Chapter not to apply where transfer of immovable property made after a certain date. - The provisions of this Chapter shall not apply to or in relation to the transfer of any immovable property made after the 30th day of September, 1986." Rule 48DD and rule 48L of the 1962 Rules provide for filing of a statement in Forms Nos. 37EE and 37-I in respect of transfer of immovable property covered under Chapters XX-A and XX-C of the Act respectively. Rule 48L of the 1962 Rules prior to the Income-tax (Seventh Amendment) Rules, 1987, read as under : "48L. Statement to be furnished under section 269UC(3).- (1) The statement required to be furnished to the appropriate authority under sub-section (3) of section 269UC shall be in Form No. 37-I and shall be signed and verified in the manner indicated therein by each of the parties to the transfer referred to in sub-section (1) of that section or by any of the parties to such transfer acting on behalf of himself and on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y and between the parties up to September 30, 1986, which do not have the effect of transferring or enabling the enjoyment of the immovable property, would not be covered under Chapter XX-A. Since Chapter XX-C came into force with effect from October 1, 1986, rule 48L(2)(a) provides that in respect of agreement to transfer entered into before October 1, 1986, to which Chapter XX-A is not applicable, statement in Form No. 37-I be filed within the time stipulated therein. Thus, in our opinion, rule 48L is in conformity and consistent with the provisions of the Act. Consequently, the challenge to the constitutional validity of rule 48L of the 1962 Rules must fail. 21. The question then to be considered is, whether the agreement dated August 30, 1986, has the effect of transferring the flat in question in favour of the petitioners so as to attract the provisions of Chapter XX-A? 22. It is contended by Mr. Dastoor, that in the present case, before entering into the agreement, the petitioners have obtained no objection certificate from the society for transfer of the flat in question in favour of the petitioners. In the agreement dated August 30, 1986, the consideration for transfer of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or by entering into any agreement or arrangement in that behalf. In other words, Chapter XX-A applies not only to the transactions where a person has become a member of a society, but also to the transactions where a person acquires right to a flat in a society, on account of his acquiring shares relating to a flat in the society by entering into an agreement or arrangement. In the present case, the society has already approved the transfer of the flat in question by the member in favour of the petitioners, the petitioners on payment of part of the sale consideration have been put in possession of the five shares relating to the flat in question along with the duly filled in transfer form, and the vendor has executed an irrevocable power of attorney in favour of the petitioners for completing the transaction. In these circumstances, in our opinion, the transaction in question would be squarely covered by the provisions of Chapter XX-A. 25. The decision of the Madras High Court in the case of K. K. Anandam Ammal v. Union of India [1995] 212 ITR 9 relied upon by counsel for the Revenue is distinguishable on facts. In that case, the property in question, which the petitioner therein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch transaction would be covered under Chapter XX-A. Therefore, in the facts of the present case, irrespective of the fact that the petitioners were put in possession of the flat in question after October 1, 1986, in view of the fact that the petitioners acquired a right in respect of the flat in question on account of their entering into an agreement prior to October 1, 1986, the transaction would be clearly covered by the provisions of Chapter XX-A of the Act. 28. Assuming that Chapter XX-C applies to the facts of the present case, in our opinion even on the merits, the impugned order cannot be sustained. As held by the Supreme Court in the case of C. B. Gautam v. Union of India [1993] 199 ITR 530, the provisions of Chapter XX-C can be resorted to only when there is a significant undervaluation to the extent of 15 per cent. of the fair market value with a view to evade tax. As held by this court in the case of Vimal Agarwal v. Appropriate Authority [1994] 210 ITR 16, it is necessary first to determine the fair market value of the property in question in the light of attending circumstances and without determining the fair market value, it is not only difficult but impossible to s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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