TaxTMI 
TaxTMI 
2001 (3) TMI 3
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....ble property should not be subjected to pre-emptive purchase under Chapter XX-C of the Income-tax Act, 1961. The respondents showed cause, but the order of pre-emptive purchase was made by the appropriate authority. This order was challenged in the writ petition. Before the High Court, it was contended that what had been transferred by the second and third respondents to the first respondent were their equal half shares in the said immovable property and that they owned such equal half shares was indicated in their income-tax returns and in the said agreement, which stated that the earnest money had been paid by two separate cheques to the second and third respondents. The High Court said : "There may be one agreement for transfer of property where the transferors may be co-owners or joint owners. It may be that the share of the transferor is not specified, It may happen that there may be one transferee or more than one. The question to be examined is whether the provisions of Chapter XX-C of the Act would be attracted or not in a case where co-owners have agreed to transfer their property rights and each co-owner is to be paid an amount of consideration which is less than the a....
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....l come definitely within the definition of the words 'immovable property'. Such a sharer was entitled to transfer his immovable property to a third person. Merely because a plurality of such individual owners joined together to enter into one single agreement to transfer their respective shares in favour of one or more persons, that would not make any difference to the main issue that what each transferred is his definite share in the property. Viewed from that perspective, the agreement entered into between the petitioners and respondents Nos. 4 to 8 is to be understood only as an agreement to convey the respective undivided shares of respondents Nos. 4 to 8. It is not in dispute that the value of each such share is less than Rs. 10,00,000. The recitals in the agreement in more than one place refer to the fact that what is sold, is the individual undivided share in the property. Consequently, the impugned order made under Chapter XX-C of the Act taking the total consideration, the collective shares, cannot be sustained (sic) . . ." The aforesaid judgment of the Madras High Court was followed by that High Court in N. C. Rangesh v. Inspector General of Registration (1991] 189 ITR....
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....f not less than twelve years. "Apparent consideration" is defined by clause (b) to mean, if the immovable property is to be transferred by way of sale, the consideration for such transfer as specified in the agreement of transfer. Section 269UC places restrictions on the transfer of immovable property. What are relevant for our purpose are sub-sections (1), (2) and (3) of section 269UC and they read thus : "269UC. (1) Notwithstanding anything contained in the Transfer of Property Act, 1882 (4 of 1882), or in any other law for the time being in force, no transfer of any immovable property in such area and of such value exceeding five lakh rupees, as may be prescribed, shall be effected except after an agreement for transfer is entered into between the person who intends transferring the immovable property (hereinafter referred to as the transferor) and the person to whom it is proposed to be transferred (hereinafter referred to as the transferee) in accordance with the provisions of sub-section (2) at least four months before the intended date of transfer. (2) The agreement referred to in sub-section (1) shall be reduced to writing in the form of a statement by each of the par....
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....t with the constitutionality of Chapter XX-C. Paragraph 21 of the judgment reads thus : "The legislative history of Chapter XX-C, in the stand taken by the Union of India and the Central Board of Direct Taxes as shown in the main counter affidavit and the affidavit of H. K. Sarangi, which has been filed after obtaining instructions from the Income-tax Department and the Central Board of Direct Taxes, make it clear that the powers of compulsory purchase conferred under the provisions of Chapter XX-C of the Income-tax Act are being used and intended to be used only in cases where in an agreement to sell an immovable property in an urban area to which the provisions of the said Chapter apply, there is a significant undervaluation of the property concerned, namely, of 15 per cent. or more. If the appropriate authority concerned is satisfied that, in an agreement to sell immovable property in such areas as set out earlier, the apparent consideration shown in the agreement for sale is less than the fair market value by 15 per cent. or more, it may draw a presumption that this undervaluation has been done with a view to evade tax. Of course, such a presumption is rebuttable and the int....