Court sets aside pre-emptive purchase order due to inadequate consideration. Size matters in property comparisons.

The court set aside the order for pre-emptive purchase under section 269UD (1) of the Income Tax Act, 1961, regarding a property in East of Kailash, New Delhi. The court found that the difference in apparent consideration between the property in question and a comparable property was below the 15% threshold required for such a purchase. The court also noted that comparing properties with significant size differences could lead to misleading conclusions. As a result, the writ petitions were allowed, and no costs were awarded in the case.

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Issues:
Challenge to order under section 269UD (1) of the Income Tax Act, 1961 regarding pre-emptive purchase based on undervalued apparent consideration compared to other properties in East of Kailash, New Delhi.

Analysis:
The judgment addressed the challenge to an order dated 25.01.1994 under section 269UD (1) of the Income Tax Act, 1961, concerning the pre-emptive purchase of a residential property in East of Kailash, New Delhi. The order was based on the conclusion that the apparent consideration of the property was understated compared to similar properties in the area. The property in question, E-41, East of Kailash, measured 450 Sq. Yrds. with a built-up structure of approximately 2000 Sq.Ft. The petitioner argued that the comparable instances used to determine the undervaluation were not truly comparable and that the methodology for computing the market value was flawed.

The court considered various contentions raised by the petitioner, including the argument that even if the comparable property E-23, East of Kailash, was taken into account, the difference in apparent consideration was less than 15%, rendering the pre-emptive purchase unjustified. The court noted that the agreed consideration for the property in question was Rs. 21 Lakh plus the unearned increase as per DDA, resulting in an apparent consideration of Rs. 29,54,800/-. Comparing this with the sale value of E-23, East of Kailash, the court found the difference to be about 14.42%, below the 15% threshold required for a pre-emptive purchase under section 269UD (1) of the Act.

Regarding another property, E-124, East of Kailash, the court deemed it incomparable to the property in question due to significant size differences. Smaller plots like E-124 tend to have higher prices per Sq. Mtr., making direct comparisons misleading. Consequently, the court set aside the impugned order for pre-emptive purchase, as the difference in consideration between the comparable property and the property in question was less than 15%. The writ petitions were allowed, and no costs were awarded in the case.

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