TaxTMI 
TaxTMI 
2011 (12) TMI 145
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....134 of 2010 and Dattatram, the Petitioner in Writ Petition No. 2135 of 2010, are brothers and the owners (hereinafter collectively referred to as owners) of one half undivided share each of Plot No. 565 of Suburban Scheme III of Chembur, CTS No. 1554A, Vithal Niwas, Ghatla Village, Ghatla Road, Chembur, Mumbai-400 0071 totally admeasuring about 890.80 sq. metres of land, with structure thereon (hereinafter referred to as 'the said property'). The brothers were apparently not in good terms. Pandharinath was in exclusive use and occupation of the eastern portion of the existing structure on the said property, whereas Dattaram, the western portion. Both Dattaram and Pandharinath separately entered into agreements described as 'Development Agreement' dated 20th April 1994 and 17th May, 1994 respectively with M/s. Sunkrish Developers (hereinafter referred to as Transferee) to develop and transfer the said property in respect of their undivided share on terms more particularly set out therein. The Transferee has also challenged the aforesaid two impugned orders (Writ Petition Nos. 2191 and 2192 of 2010). Respondent No.1 is the Appropriate Authority under Chapter XXC of the IT Act, 1961 a....
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.... the Appropriate Authority there was significant undervaluation of the said property. The Valuation Report along with three sale instances as Annexure 'A' thereto, was annexed to the aforesaid notices. In the case of Pandharinath, after making adjustments as reflected in the table hereinbelow, the rate per sq.ft FSI under the agreement was worked out by the Valuation Officer at Rs.932/as follows: Particulars Amount Total consideration Rs.26,00,000/ Amt. adjusted against the const. cost of the flat to be given Rs.6,00,000/ Apparent consideration Rs.20,00,000/ Deferred value (on account of instalments) Rs.18,68,430/ Liability: Construction Cost Rs.6,00,000/ Rent for 18 Months @ Rs.4000/p. m. Rs.72,000/ Credit: scrap value 25,950/ Net Consideration Rs.25,14,480/ Area of Land Total Land Area 445.4 sq. mtrs. Total FSI available 890.8 X10.764X1/2 X0.75 3596 sq.ft. FSI available to the Developer 2698 sq.ft. FSI rate per sq.ft. (built up) Rs.932/ So far as Dattaram's case is concerned, there was a slight difference in the FSI rate per sq. ft as worked out by the Valuation Officer, because o....
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....70,340/. The Appropriate Authority vide its letters dated 30th August, 1994, which was sent alongwith acquisition orders, also called upon owners to submit the original title deeds/documents etc. relating to the said property within 6 days and to hand over the possession of the property within 15 days from the receipt of the letter. It was stated in the said letters that upon passing of the orders dated 30081994, the property vests in the Central Government and that on failure to comply, action would be taken as per provisions of Section 269UE(2) and (4). 8. Aggrieved by the orders dated 30th August, 1994 passed by the Appropriate Authority, Pandharinath and Dattaram jointly filed a Writ Petition being W.P. No. 2110 of 1994 on 14-9-1994. By an order dated 22-9-1994 the Division Bench of this Court granted interim relief in the following terms: "Only interim relief granted is, Department will not auction the property after obtaining the possession" This order was not subjected to challenge by either of the parties. 9. On 28-09-1994, the Appropriate Authority informed the owners and Transferee that since they had failed to handover vacant posse....
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.... to give a letter confirming that the Appropriate Authority is in notional possession of the property as against the Appropriate Authority confirming the compliance of the obligations under the agreements and once again asked the Appropriate Authority to take possession of the said property and make payments of the purchase price to them. Matters stood at that and during the pendency of the writ petition, the owners continued to remain in possession of the property and the purchase price remained deposited with the Appropriate Authority, which amount was later invested in Term Deposits. 12. The aforesaid Writ Petition No. 2110 of 1994 came up for final hearing in 2008-09 and further affidavits came to be filed by the parties. The Division Bench of this Court after considering the submission of the parties vide its Judgment dated 15th June, 2009 held that the orders dated 30th August, 1994 passed by the Appropriate Authority under section 269UD(1) of the Act cannot be sustained. The Division Bench observed that the transactions referred and relied upon by the Petitioners and more particularly transaction No.3 were not properly considered by the Appropriate Authority. The D....
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....ted period subject to the owners complying with the conditions under section 269UE(2) of surrendering or delivering possession of the property to the Appropriate Authority within 15 days of the service of the said order. 14. Being aggrieved by the orders dated 23rd October, 2009, initially the owners jointly filed Writ Petition No.1210 of 2010. The said writ petition was allowed to be withdrawn with liberty to file two separate petitions. Thereafter, the aforesaid petitions came to be filed by the owners as also the Transferee. 15. Mr. Mistri, Learned Senior Counsel for the Petitioners made the following submissions. (i) that under the agreements each of the owners was to receive a sum of Rs.26,00,000/and one flat admeasuring 988 sq. ft. in the newly constructed building and the owners were only required to pay Rs. 6,00,000/being the costs of construction of the flat and the land was to be transferred to a Cooperative Housing Society. For the purpose of determining the apparent consideration and the rate, the Appropriate Authority ought to have considered the market value of flat of 988 sq.ft. and not the construction cost of the flat. The rate per sq.....
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....h and ignore the sale instances given by the Petitioners; (vii) that the Appropriate Authority failed to comply with the terms and conditions of the agreements including providing alternate rent free accommodation. 16. In support of his submissions the learned Senior Counsel has relied upon the following judgments: (i) Chand V. Raheja vs. Union of India (1996) 7 SCC 175. (ii) Parasrampuria Estate Developers P. Ltd. V. Members of Appropriate Authority, 282 ITR 110. (iii) Union of India vs. Madhusudan Das, 254 ITR 581. (iv) Madhusudan Das vs. Appropriate Authority, 223 ITR 353. (v) Hotel Mardias Pvt. Ltd. vs. Union of India, 220 ITR 94. (vi) Appropriate Authority vs. Tanvi Trading Trading and Credits P. Ltd., 191 ITR, 307. (vii) Tanvi Trading and Credits P. Ltd. vs. Appropriate Authority, 188 ITR 623. (viii) Jethamal Mohanlal Khivansara V. Union of India, 272 ITR 143. (ix) Mrs. Kailash Suneja vs. Appropriate Authority, 231 ITR 318. (x) Shrichand Raheja vs. S.C. Prasad (Appropriate Authority), 213 ITR 33. The Ld. Senior Counsel also pointed out the meaning ....
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....e Petitioners. In support of his submissions the learned Counsel has relied upon the following judgments: (i) Appropriate Authority vs. Smt. Sudha Patil, 235 ITR 118. (ii) Union of India vs. Shatabdi Trading and Investment P. Ltd., 251 ITR 93. (iii) Smt. Vimla Devi G. Maheshwari vs. S.K. Laul, 208 ITR 734. (iv) Mrs. Sooni Rustam Mehta vs. Appropriate Authority 190 ITR 290. (v) Special Land Acquisition Officer (1) Bombay and Bombay Suburban District V. Natverlal Jamnadas Muni AIR 1968 Bombay 31. (vi) Sarju Prasad Saha vs. The State of U.P., AIR 1965 SC 1763. The Ld. Counsel also invited our attention to Wharton's Concise Law Dictionary to submit that the expression "title" would include "possession" within its ambit. 18. We have given our anxious consideration to the rival contentions. Valuation and Apparent Consideration Valuation 19. Under the agreements, the consideration was fixed at Rs.26,00,000/. Each of the owners was to be provided a flat admeasuring 988 sq ft (builtup) on ownership basis in the proposed new building. Out of the consideration of Rs.26,00,00....
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....ed. 22. In the transactions as it stood, the owners would have benefited much more in terms of what they would receive as consideration inasmuch as they were to receive a flat by paying merely the cost of construction of the flat as against the market value of the flat which would naturally be much more than the value of the cost of construction of the flat. Had the market value of the flat taken into account, the value would work out to much more than Rs.26,00,000/-, and the possibility of that figure matching up to the estimated fair market rate per sq.ft. FSI of Rs.1,200/adopted by the Appropriate Authority based on the Valuation Report, cannot be ruled out. There was therefore, a lacuna in the valuation of the property and the Valuation Reports are flawed to that extent. We therefore find merit in the contention of the Ld. Sr. Counsel that in working out the valuation, the market value of the flats are not taken into consideration. 23. Section 269UA(b)(2)(iii) of the IT Act which defines 'apparent consideration' of immovable property falling under subclause (ii) of clause (d) of section 269UA(d) to mean in cases where the consideration for the transfer consi....
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....st money and payment of remaining Rs.16 lakhs was deferred and, therefore, discounted value of the deferred payment was worked out at Rs.14,70,340/. By making addition of Rs.4 lakhs already paid, he determined the consideration to Rs.18,70,340. In the case of Petitioner No. 2 - Pandharinath, the amount of Rs.1 lakh was paid as earnest money and payment of balance amount of Rs.19 lakhs was deferred. The discounted value of the deferred payment was worked out at Rs.17,68,480/By adding Rs.1 lakh already paid, the consideration payable by the Central Government was worked out at Rs.18,68,430 by the Appropriate Authority. As already pointed out, as per the valuation report, net apparent consideration of property of Petitioners Nos. 1 and 2 was worked out at Rs.25,05,710/and Rs.25,14,480/and the valuation report was the basis of the show cause notices. It would show that Appropriate Authority gave conflicting and contrary findings in respect of net apparent consideration and the fair market value to be paid by the Government. It shows nonapplication of mind by the Appropriate Authority in passing the impugned order." 28. Section 269 UF (1) stipulates that where an order for the....
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.... the mandate of sections 269UD(1) and 269UF(1) of the IT Act which enjoins upon the Central Govt. to pay by way of consideration for the purchase, an amount equal to the amount of apparent consideration. Consequently therefore the quantum of deposit made by the Central Government in the PD Account of the Appropriate Authority is not in accordance with law and the said deposit would have to be held as invalid. 34. For the aforesaid reasons, we find that the impugned orders of the Appropriate Authority are perverse and suffer from the vice of nonapplication of mind, and on this ground also the impugned orders are unsustainable and are liable to be set aside. 35. In Appropriate Authority vs. Smt. Sudha Patil, (supra) relied upon on behalf of the Respondents, the Apex Court observed as under: "Merely because no appeal is provided for, against the order of the appropriate authority directing compulsory acquisition by the government, the supervisory power of the High Court does not get enlarged nor can the High Court exercise an appellate power. On the materials, if two views are possible, one which has been given by the inferior Tribunal and the other which....
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....he above findings of the appropriate authority acting under section 269UD of the Income tax Act, 1961 are perverse or show a total nonapplication of mind to the relevant facts, it would not be proper on the part of the High Court to interfere with the order of purchase." Having come to a finding that there was perversity and nonapplication of mind in passing the impugned orders, this judgment would support the case of the Petitioners rather than that of the Respondents. 38. In the case of the Appropriate Authority vs. R.C. Chawala, (2001) 4 SCC, 710, it was observed by the Apex Court: "It is well known principle of Administrative Law that if the relevant factor is ignored, the order become vitiated" The same principle was also reiterated by the Supreme Court in the Appropriate Authority vs. Shashi Saigal, (2001) 5 SCC 627 wherein it was held: "When relevant factor has been ignored by the Appropriate Authority, the High Court has rightly held that the order of the Appropriate Authority is vitiated" Abrogation and Revesting 39. The present case is governed by Chapter XXC of the IT Act, 1961 (which has since ceased ....
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....there is any dispute as to the title to receive the amount of consideration, the Central Government shall deposit with the Appropriate Authority the amount of consideration required to be tendered under subsection (1) within the period specified therein. Section 269 UH provides that if the Central Government fails to tender under subsection (1) of Section 269 UG or deposit under subsection (2) or subsection (3) of the said section, the whole or any part of the amount of consideration required to be tendered or deposited thereunder within the period specified therein in respect of any immovable property which has vested in the Central Government, the order to purchase the immovable property by the Central Government made under subsection (1) of Section 269 UD shall stand abrogated and the immovable property shall stand revested in the transferor after the expiry of the aforesaid period. 40. In the present case, the following facts are not in dispute: (i) that after passing of the impugned orders on 23-10-2009, the amount of consideration is not tendered to the owners; (ii) that the amount of consideration was deposited in the P.D. Account of the Appropr....
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.... property would vest in the Central Government on that date and further provided under section 269UE(2) that the transferor shall hand over possession of the property to the Central Government within 15 days of the service of the order of preemptive purchase. Section 269 UE(3) provided that upon the failure of the transferor to hand over possession of the property, the Appropriate Authority was empowered to take forcible possession. Section 269UE(4) is particularly relevant for our purposes. We deem it appropriate to extract the same in its entirety hereunder: 269UE(4)" Notwithstanding anything contained in subsection (2), the appropriate authority may, for the purpose of taking possession of any property referred to in subsection (1), requisition the services of any police officer to assist him and it shall be the duty of such officer to comply with such requisition." 45. The aforesaid subsection (4) of section 269UE thus begins with a nonobstante clause and has an overriding effect on section subsection (2) which obliges the transferor to deliver possession within the prescribed period. Subsection (4) thus provides the course of action to be followed if the tr....
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.... Central Government to deposit the purchase price with the Appropriate Authority (instead of tender to the owners) have not been satisfied and, therefore, the deposit made in the P.D. account of the Appropriate Authority by the Central Government was impermissible and not in accordance with law. 49. Having come to the conclusion that the deposit made was impermissible and not in accordance with law and considering the mandatory provisions of tender as stipulated under section 269 UG(1), as also the admitted position that the Central Government had not tendered the amount of consideration to the owners, section 269 UH would clearly be attracted in the facts of the case. 50. In Chand V. Raheja vs. Union of India, (1996) 7 SCC 175 the Apex Court noted as under: " In other words the amount so paid on 131994 to the transferors by the Central Government fell short of the total consideration by the sum of Rs.50 lacs only.... Learned Counsel for the Revenue in reply submitted that the agreement between the Transferor and Transferee enabled the retention of the amount of Rs.50 lacs out of the total amount of consideration till vacant possession of the outhouses....
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....nt of consideration payable in accordance with the provisions of Section 269 UF shall be tendered to the person or persons entitled thereto. In view of the language of Section 269UG regarding payment time stipulated therein or deposit of money in cases of contingencies as envisaged in Section 269UG (2) and (3), the provisions are clearly mandatory in character. Moreover the consequences of failure to pay or tender in time or deposit in the circumstances mentioned in section 269UG are clearly stated in Section 269 UH of the Act, that is, the property stands revested in the owner, on the expiry of the said period. Section 269UG contemplates the contingencies when the amount of consideration could be deposited by the Central Government with the authority are (a) In case of any dispute as to the apportionment of the amount of consideration amongst persons claiming to be entitled thereto; (b) In case of the persons entitled to the amount of consideration do not consent to receive it or if there is any dispute as to the title to receive the amount of consideration. Admittedly, there was no dispute as to the title of the joint trustees. The joint trustees never refused, either individuall....
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....titlement of the owners to receive the amount of consideration and therefore, the said judgment would not assist the case of the Respondents. 56. In Special Land Acquisition Officer vs. Natverlal Jamnadas Muni, (supra), the controversy before the Single Judge of this Court, was with regard to the word dispute used in section 30 and subsection 2 of Section 31 of the Land Acquisition Act and whether the word dispute is construed as being applicable only when there are more than one party to a dispute but not otherwise, the Court held that inspite of the fact that the natural meaning of the word dispute presupposes two person and section 30 uses the word persons in plural it must be construed as covering the case whether the Collector is unable or unwilling or has committed to decide whether the sole claimant appearing before him is or is not entitled to the property acquired and the compensation thereof. In these circumstances it was held that the amount of the compensation has been validly deposited in the Court to the credit of the reference under Section 18. This judgment would have no application to the facts of the present case. 57. The decision of the Apex C....