1994 (9) TMI 28 - HC - Income Tax

Court upholds pre-emptive purchase order, validates property valuation, dismisses objections. Vendor's interest claim denied.

Krishna Kumar Rawat And Others Versus Union Of India And Others

Krishna Kumar Rawat And Others Versus Union Of India And Others - [1995] 214 ITR 610, 123 CTR 61, 78 TAXMANN 142 Issues Involved:1. Maintainability of the writ petition.2. Validity of the pre-emptive purchase order under section 269UD.3. Adequacy of the opportunity given to the petitioner.4. Correctness of the valuation of the property.5. Consideration of the market value and comparable sales.6. Objection regarding the land being identifiable and co-owners' consent.7. Claim for interest by the vendor.Issue-wise Detailed Analysis:1. Maintainability of the Writ Petition:The court rejected the preliminary objection regarding the maintainability of the writ petition, stating that the respondents are to blame themselves for any contravention of the Act. The writ petition against the order passed by the appropriate authority is maintainable.2. Validity of the Pre-emptive Purchase Order under Section 269UD:The appropriate authority issued a show-cause notice on March 8, 1994, under section 269UD(1A) of the Act, citing that the apparent consideration was lower than the market value. The authority compared the property with a plot at A-90, Triveni Nagar, and calculated the value at Rs. 1,34,39,556. The petitioner's objections were considered, but the authority concluded that the value of the property, including godowns, was Rs. 1,79,21,532, significantly higher than the apparent consideration of Rs. 99,84,500. The court found no fault with the order of pre-emptive purchase.3. Adequacy of the Opportunity Given to the Petitioner:The court held that the opportunity given to the petitioner was reasonable. The case was adjourned on the request of the parties, and the objections raised by the petitioner were duly considered by the appropriate authority.4. Correctness of the Valuation of the Property:The court discussed various methods of property valuation, including comparable cases, return basis, direct capital comparison, residual method, profit basis, cost of replacement, break-up method, municipal valuation, and land and building method. The valuation by the appropriate authority was based on comparable sales and the land and building method. The court found that the valuation of Rs. 42 lakhs for the godowns and Rs. 1,37,21,532 for the land was reasonable and supported by evidence.5. Consideration of the Market Value and Comparable Sales:The court emphasized that the valuation must be based on objective factors and comparable cases. The appropriate authority considered the sale of a plot by the Jaipur Development Authority at Rs. 1,781 per sq. meter and made necessary adjustments. The court upheld the authority's valuation, noting that the market value determined was more than the apparent consideration by over 15%, justifying the pre-emptive purchase.6. Objection Regarding the Land Being Identifiable and Co-owners' Consent:The court dismissed the objection that the land was not an identifiable separate piece and that other co-owners might object. The vendor had taken responsibility for sub-division and conversion charges. The court noted that there was no evidence of objection from co-owners when the petitioner took possession, implying consent.7. Claim for Interest by the Vendor:The court rejected the vendor's claim for interest, stating that the vendor had already received Rs. 40,00,000 as an advance and had certain obligations to fulfill. The court did not consider the case appropriate for directing the Central Government to pay interest in addition to the consideration.Conclusion:The court found no mistake apparent from the record, nor any lack of application of mind or perversity in the order of the appropriate authority. The writ petition was rejected, and the Central Government was directed to make the payment to the seller within 15 days upon fulfilling the obligations as per the agreement and law.