1986 (1) TMI 47 - HC - Income Tax

Successful appeal under Income-tax Act on property acquisition; court finds valuation issues, sets aside orders.

The appeal challenging the acquisition of property under section 269F(6) of the Income-tax Act, 1961 was successful. The court found the acquisition ... Advance Tax, Refund Issues involved: The judgment questions the acquisition of property by the Revenue-respondent due to inadequate consideration in a conveyance deed. The appeal challenges the order for acquisition under section 269F(6) of the Income-tax Act, 1961, upheld by the Income-tax Appellate Tribunal 'C' Bench, Bombay.Inadequate Consideration Issue: The appellant relied on a Division Bench judgment to argue that the acquisition proceedings were not in accordance with the law, as the notices were invalid and not initiated within nine months from the date of sale. The defects highlighted in the previous judgment were found to be present in the current case, rendering the acquisition proceedings under section 269F(6) invalid.Valuation and Consideration Issue: The Tribunal's valuation of the property, including the scrap value of the building, was contested. The value of the property was calculated to be Rs. 4,59,365, which included land value at Rs. 200 per square yard. However, the appellant argued that the liability to provide alternative accommodation to tenants should be considered, making the transaction fair and not inadequate.Market Value Calculation Issue: The Revenue contended that the total liability under the transaction should include the capitalised value of the standard rent, making the transaction fall under section 269C(2)(a) of the Income-tax Act, 1961. The court disagreed, stating that the liability undertaken by the purchaser should be given due credit, and after considering all factors, the market value was notionally worked out to be Rs. 2,73,165, which did not exceed the apparent consideration in the conveyance deed by more than 25 percent.Conclusion: The appeal was allowed, and the orders for acquisition were set aside based on the inadequate consideration and valuation grounds. The judgment emphasized the importance of considering all liabilities and factors in determining the market value of the property.