Deferred sale consideration and transfer expenses under Chapter XX-C are limited to statutory discounting and set-offs only.
Under Chapter XX-C, deferred sale consideration payable after the agreement date is to be treated as its discounted value on the agreement date under section 269UA(b), so the apparent consideration is reduced only to that extent. Stamp duty and registration charges that the transferor agreed to bear cannot be deducted where no conveyance deed is actually executed on a pre-emptive purchase under section 269UD; the statutory payable amount under section 269UF is confined to the apparent consideration and the limited set-offs expressly permitted under section 269UG. Hypothetical conveyance expenses outside that mechanism are not deductible.
Issues: (i) Whether, under Chapter XX-C, the apparent consideration could be reduced by discounting the deferred portion of the sale price payable after the date of the agreement. (ii) Whether stamp duty and registration charges, which the transferor had undertaken to bear, could be deducted from the apparent consideration while determining the amount payable on pre-emptive purchase.
Issue (i): Whether, under Chapter XX-C, the apparent consideration could be reduced by discounting the deferred portion of the sale price payable after the date of the agreement.
Analysis: The definition of apparent consideration in section 269UA(b) expressly provides that where any part of the consideration is payable after the date of the agreement for transfer, its value shall be deemed to be the discounted value as on the date of the agreement, determined by the prescribed rate of interest. The statutory language leaves no scope to treat the full deferred amount as the apparent consideration without such discounting.
Conclusion: The deduction on account of discounting deferred payment was valid and is against the assessee.
Issue (ii): Whether stamp duty and registration charges, which the transferor had undertaken to bear, could be deducted from the apparent consideration while determining the amount payable on pre-emptive purchase.
Analysis: On an order under section 269UD, the property vests in the Central Government by force of statute, and no conveyance deed requiring stamp duty or registration comes into existence. The amount payable under section 269UF is the apparent consideration as defined by the Act, and section 269UG permits only the specified statutory set-offs. Hypothetical conveyance expenses not actually incurred cannot be deducted from the apparent consideration.
Conclusion: The deduction of stamp duty and registration charges was impermissible and is in favour of the assessee.
Final Conclusion: The petitions succeeded only to the extent that the deduction for stamp duty and registration charges was struck down, while the discounting of deferred consideration was upheld.
Ratio Decidendi: Under Chapter XX-C, apparent consideration may be discounted for deferred payment only to the extent expressly authorised by section 269UA(b), and no further reduction is permissible on account of hypothetical conveyance expenses not actually incurred or not included within the statutory set-off mechanism.