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1992 Supreme(Guj) 347
IN THE HIGH COURT OF GUJARAT
S.B. MAJMUDAR, C.V. JANI, JJ.
Pradip Ramanlal Sheth - Petitioner
Versus
Union of India and Others - Respondent
Special Civil Application No. 1861 of 1992
Decided on : 09-07-1992
For the Petitioner:Girish N. Shah, Advocate.
For the Respondent:B.J. Shelat with M.R. Bhatt, Advocates.
The definition of "apparent consideration" in section 269UA(b) contemplates discounting of the value of deferred consideration.
Headnote:
INCOME TAX ACT, 1961 - SECTION 269UA(B), 269UC(1), 269UD(1), 269UF(1) - PURCHASE OF IMMOVABLE PROPERTY - APPARENT CONSIDERATION - DEDUCTION - DISCOUNTING OF DEFERRED CONSIDERATION - REGISTRATION FEES AND STAMP DUTY - INTEREST ON DISPUTED AMOUNT.
Fact of the Case:
The petitioner, the owner of a property, entered into an agreement of sale with a purchaser for a consideration of Rs. 17,75,000. The purchaser paid Rs. 4,50,000 as earnest money. The agreement was registered. As per Chapter XX-C of the Income Tax Act, 1961, a provision is made for purchase by the Central Government of immovable property in certain cases of transfer. The appropriate authority, in exercise of its powers under section 269UD(1), passed an order for the purchase by the Central Government of the aforesaid immovable property at an amount equal to the amount of apparent consideration. The petitioner challenged the order on the ground that it had become infructuous and incompetent as the amount to be paid to the petitioner or seller by the Central Government was not paid within the requisite time and, therefore, the appropriate authority was required to return the property to the petitioner as it stood revested in the petitioner. The challenge was given up and the challenge in the petition was confined only to the deduction of Rs. 35,333 and Rs. 1,02,062 from the total amount held payable to the petitioner, as per section 269UC(1) read with section 269UD(1).
Finding of the Court:
1. The deduction of Rs. 35,333 from the total consideration mentioned in the agreement of sale cannot be found fault with. Such deduction is contemplated by the statutory scheme and is not contrary to or de hors it. 2. The deduction of Rs. 1,02,062 in the light of clause 14 of the agreement is not permissible on account of the first part of the definition of "apparent consideration" as found in section 269UA(b) to the effect that, if the immovable property is transferred by way of sale, the apparent consideration for such transfer would be as specified in the agreement for transfer. Clause 14 of the agreement does not specify any part of consideration for the transfer so as to get covered by the sweep of the first part of the definition "apparent consideration".
Issues: 1. Whether the appropriate authority was justified in computing the apparent consideration in the present case for the purposes of sections 269UD(1) and 269UF(1) by deducting Rs. 35,333 from the amount of Rs. 17,75,000 mentioned as the price of the property subjected to the agreement of sale? 2. Whether the appropriate authority was justified in deducting Rs. 1,02,062 by way of 50 per cent. cost of registration fees and stamp duty agreed to be borne by the petitioner seller for executing the sale deed as per clause 14 of the agreement to sell, while computing the apparent consideration for the purpose of sections 269UD(1) and 269UF(1)?
Ratio Decidendi: 1. The definition of "apparent consideration" in section 269UA(b) contemplates discounting of the value of deferred consideration. The last part of the definition provides that where the whole or any part of the consideration for such transfer is payable on any date or dates falling after the date of such agreement for transfer, the value of the consideration 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 by statutory rules. 2. Clause 14 of the agreement, which provides for the sharing of the costs of registration fees and stamp duty between the vendor and the purchaser, does not specify any part of consideration for the transfer so as to get covered by the sweep of the first part of the definition "apparent consideration" as found in section 269UA(b).
Final Decision: The petition is allowed to a limited extent. The order at annexure B is quashed and set aside to the extent that it directed deduction of Rs. 1,02,062 from the apparent consideration payable to the petitioner. The respondents are directed to pay to the petitioner the additional amount of Rs. 1,02,062 with 12 per cent. interest from April 1, 1992, till the amount is paid up to the petitioner.
JUDGMENT :
S.B. Majmudar, J.
In this petition under article 226 of the Constitution of India, the petitioner who was the owner of a property consisting of land admeasuring about 357 sq. mtrs. (428 sq. yards) along with the superstructure bearing sub-plot No. 6/2 of Final Plot Nos. 306-307 and 308 of the Town Planning Scheme No. 8 at Mithakhali in this town, has brought in challenge the order passed on January 31, 1992, by members of the appropriate authority functioning under section 269UD of the Income-tax Act, 1961 (hereinafter referred to as "the Act"). The challenge at this stage of the final hearing of this petition is confined to two deductions made by the appropriate authorities from the amount held payable to the petitioner for compulsory purchase of the aforesaid property by the Central Government. These disputed deductions are :
(a) Rs. 35,333 ; and
(b) Rs. 1,02,062.
2. In order to appreciate the controversy centring round the two disputed amounts, it is necessary to note a few introductory facts :
3. As noted earlier, the petitioner was the owner of the aforesaid property. He had entered into an agreement of sale dated October 30, 1991, with Messrs. Manipal Saubhagya Nidhi Limited (purchaser) for the sale of the said property for a consideration of Rs. 17,75,000. The purchaser had paid to the petitioner on execution of the agreement a sum of Rs. 4,50,000 as earnest money. The said agreement was registered with the Sub-Registrar, Ahmedabad, at Sr. No. 27198 on October 30, 1991. As per Chapter XX-C of the Act, a provision is made for purchase by the Central Government of immovable property in certain cases of transfer. In this Chapter are found section 269U to section 269UO. These provisions confer a statutory right of pre-emption on the Central Government to purchase any immovable property which is sought to be sold by the seller to the purchaser on an apparent consideration of the amount mentioned in the agreement of sale provided the prescribed value of the transfer of any immovable property exceeded Rs. 5,00,000 which, at the relevant time, was Rs. 10,00,000. We are told at the Bar that, as on this date also, the said prescription continues : As the agreement of sale in the present case was for an apparent consideration of Rs. 17,75,000, the seller and the purchaser had to follow the procedure laid down by section 269UC of the Act. The said provision reads as under :
"Section 269UC.(1) Notwithstanding anything contained in the Transfer of Property Act, 1882 (4 of 1882), or in any other law for the time being in force, no transfer of any immovable property of such value exceeding five lakh rupees as may be prescribed, shall be effected except after an agreement for transfer is entered into between the person who intends transferring the immovable property (hereinafter referred to as "the transferor"), and the person to whom it is proposed to be transferred (hereinafter referred to as "the transferee"), in accordance with the provisions of sub-section (2) at least three months before the intended date of transfer.
(2) The agreement referred to in sub-section (1) shall be reduced to writing in the form of a statement by each of the parties to such transfer or by any of the parties to such transfer acting on behalf of himself and on behalf of the other parties.
(3) Every statement referred to in sub-section (2) shall, -
(i) be in the prescribed form ;
(ii) set forth such particulars as may be prescribed ; and
(iii) be verified in the prescribed manner,
and shall be furnished to the appropriate authority 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."
4. On the basis of the statements furnished by the concerned parties under section 269UC(2), the appropriate authority, in exercise of its powers under section 269UD(1), passed an order for the purchase by the Central Governm
