TaxTMI 
TaxTMI 
1996 (4) TMI 70
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....mpany is the absolute owner of 45 acres of land with superstructures standing thereon being a part of the property, known as "the Bangalore Palace Property" having an extent more or less of 454 acres. According to the petitioners, as disclosed in the writ petition, in the course of business, the third respondent-company, which is engaged in the business of development of proper ties, entered into an agreement dated July 6, 1994, with the first petitioner for developing 35 acres of land out of the said 45 acres by constructing residential complexes thereon with support facilities, such as club house, school, shopping centre, community hall, etc. As per the petitioners, under the said agreement, in consideration of the petitioners agreeing to transfer/convey their undivided 50 per cent. share in their property to the third respondent developer, the latter has agreed to build and deliver to the first petitioner 50 per cent. of the total built-up area of the building to be constructed on the said land. The petitioners have further stated that in the said agreement between them and the third respondent, it has been mentioned that the first petitioner as the owner is in quiet enjoymen....
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....stion. Accordingly, I called for the records of the said writ petition, from which it transpired that by order dated July 27, 1989, the competent authority under the Ceiling Act had declared the entire land over and above 1,000 square metres in the possession of the present first petitioner as excess vacant land keeping in view section 4(1)(b) of the Ceiling Act. Paragraph 7 of this order of the competent authority which is relevant for the present purpose reads thus : " Chamundi Hotels (P.) Ltd., Bangalore, is deemed to hold to an extent of 3,87,138 sq. mtrs., of vacant land, after deducting the built area and the appurtenant land, roads, tanks, etc. The details of the land held by Chamundi Hotels (P.) Ltd., Bangalore, the built area, non-vacant area and the appurtenant area are furnished in annexure 'B'. After allowing a share of 1,000 sq. mtrs., in accordance with section 4(1)(b) of the Act, there is an excess vacant land of 3,86,138 sq. mtrs., held by Chamundi Hotels (P.) Ltd., Bangalore. " It appears that similar orders were passed in respect of seven other declarants and all of them including the petitioner-company had filed appeals under section 33 of the Ceiling Act b....
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....1, 1994, passed in O. S. A. No. 10 of 1989 (annexure "M"). As per the certificate issued by the Corporation of the City of Bangalore, the Khata of the land stand in the name of the petitioner-company (annexure "N"). The order passed by the Additional Special Deputy Commissioner on July 27, 1989, declaring 3,86,138 square metres of land as in excess of the ceiling limit in the hands of the petitioner-company, as already referred to above, has now been placed at annexure "P". By a subsequent memo, the petitioner has also brought on record that the petitioner has now also filed a writ petition being W. P. No. 2390 of 1996 challenging the order of the competent authority under the Ceiling Act and of the Tribunal in which further proceedings have been stayed. From the documents now brought on record it transpires that the petitioner is not only guilty of suppressing material facts but has also indulged in falsehood by asserting that he is the absolute owner of 45 acres of land in question. From the order dated July 26, 1990 (annexure "L"), passed by this court in O. S. As. Nos. 10 to 13 of 1989, the material facts to the extent those are relevant for the present purpose may be notice....
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....rom the operation of the Ceiling Act and the Karnataka Land Reforms Act, which appears to have created some hurdles in retention of such a vast extent of land by the Maharaja's family. But this settlement could not resolve the disputes between the parties. In June, 1987, Sri Srikantha Datta Narasimharaja Wadiyar, the son of the late Maharaja, filed Company Petitions Nos. 2 of 1986 and 67 of 1987 under sections 397 and 398 of the Companies Act. Company Petition No. 50 of 1987 also came to be filed under section 433(f) of the Companies Act praying for winding up of the company. Subsequent to the dismissal of the said petitions, O. S. As. Nos. 12 and 13 of 1989 were filed by Sri S. N. Wadiyar which were disposed of with other appeals on July 26, 1990, as noticed above. 110 acres of land which was intended to be sold to the petitioner-company form part of Schedule-B of the property and was delineated in the annexed plan with red and blue with all buildings and structures thereon, etc. Certain directions made in the aforesaid order dated July 26, 1990, which are relevant for the present purpose, read as under : " (8) The appellant and Sri A. Chandrasekhar Raju representing the respon....
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....ing over of control of Venkateshwara Real Estate Enterprises Private Limited by the respondents to the appellant. That is how the matters were posted for being spoken to. Today a memo has been filed by the parties and learned counsel for the parties, on instruction submit that all the directions contained in the aforesaid order of the court have been complied with and this fact they wanted to place on record. The memo duly signed by the parties and their counsel is kept on record. Therefore, all the directions contained in the aforesaid order are treated to have been complied with. No further orders are necessary. (Sd.) (S. B. Majmudar), Chief Justice (Sd.) (Tirath S. Thakur), Judge." The petitioner-company has also brought on record a certificate issued by the Corporation of the City of Bangalore dated July 26, 1988 (annexure "N"), wherefrom it transpires that the property No. 1 on Bangalore Palace Compound Road falling in Division No. 71 has been recorded in the Khata of the petitioner-company. I am to observe here that though the competent authority under the Ceiling Act had already passed its order dated July 27, 1989, under section 6(1) of the Ceiling Act dec....
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....on cannot be justified as of an owner or as a tenant or as a mortgagee or under an irrevocable power of attorney or under a hire purchase agreement ; and, therefore, there is hardly any occasion to apply the Explanation appended to the aforesaid definition of "to hold". It is this aspect, though it is not very relevant for the present purposes, which amazes me as to how the competent authority has treated the petitioner-company as a holder of the land even for the restricted purpose of the Ceiling Act. Irrespective of the said consideration, what is more material and has to ultimately clinch the issue is that admittedly the petitioner-company is not the owner of the land in question, and to this extent the petitioners have made a blatantly false statement before this court and possibly also before the appropriate authority under Chapter XX-C of the Income-tax Act representing that petitioner-company is the absolute owner of the land in question. At the cost of repetition, I am constrained to hold that neither at any point of time was the title in the land in question transferred in favour of the petitioner-company nor in law could it have been transferred because of the statutory b....
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....change or lease for a term of not less than twelve years, and includes allowing the possession of such property to be taken or retained in part performance of a contract of the nature referred to in section 53A of the Transfer of Property Act, 1882 (4 of 1882) : Explanation.--For the purposes of this sub-clause, a lease which provides for the extension of the term thereof by a further term or terms shall be deemed to be a lease for a term of not less than twelve years, if the aggregate of the term for which such lease is to be granted and the further term or terms for which it can be so extended is not less than twelve years ; (ii) in relation to any immovable property of the nature referred to in sub-clause (ii) of clause (d), means the doing of anything (whether by way of admitting as a member of or by way of transfer of shares in a co-operative society or company or other association of persons or by way of any agreement or arrangement or in any other manner whatsoever) which has the effect of transferring, or enabling the enjoyment of, such property. " "Section 269UC. (1) Notwithstanding anything contained in the Transfer of Property Act, 1882 (4 of 1882), or in any ot....
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....rder under sub-section (1) of section 269UD is made by the appropriate authority in respect of an immovable property referred to in sub-clause (i) of clause (d) of section 269UA, such property shall, on the date of such order, vest in the Central Government in terms of the agreement for transfer referred to in sub-section (1) of section 269UC: ." " Section 269UF. (1) Where an order for the purchase of any immovable property by the Central Government is made under sub-section (1) of section 269UD, the Central Government shall pay, by way of consideration for such purchase, an amount equal to the amount of the apparent consideration. (2) Notwithstanding anything contained in sub-section (1), where, after the agreement for the transfer of the immovable property referred to in that sub-section has been made but before the property vests in the Central Government under section 269UE, the property has been damaged (otherwise than as a result of normal wear and tear), the amount of the consideration payable under that sub-section shall be reduced by such sum as the appropriate authority for reasons to be recorded in writing, may by order determine. " " Section 269UG. (1) The amou....
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....re in an agreement to sell an immovable property in an urban area to which the provisions of this Chapter apply, there is significant undervaluation of the property concerned, namely, by 15 per cent. or more. It has further been held that : " 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 intended seller or purchaser can lead evidence to rebut such a presumption. Moreover, an order for compulsory purchase of immovable property under the provisions of section 269UD requires to be supported by reasons in writing and such reasons must be germane to the object for which Chapter XXC was introduced in the Income-tax Act, namely, to counter attempts to evade tax. " The mechanism devised by Parliament for achieving the aforesaid object is that though under the provisions of the Transfer of Property Act the transfer of immovable property, tho....
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....of purchase by the Central Government of its own property or to give statutory consent to such a palpably illegal transaction. In my opinion, the giving of such a grammatical construction to the said provisions will amount to attributing absurdity to the legislative exercise which is impermissible under the established canons of interpretation of enactments. The only conclusion, therefore, can be that the appropriate authority can be directed to act under Chapter XX-C only if it is found that the agreement filed under section 269UC is not void, and as such is not non est in law. This being the jurisdictional premise on which the appropriate authority can proceed to act, unless such premise is shown to exist, this court under writ jurisdiction cannot issue any direction to the appropriate authority to act in any of the manners provided under Chapter XXC of the Act. Section 7 of the Transfer of Property Act provides for a person competent to transfer property and it reads as under : "Every person competent to contract and entitled to transferable property, or authorised, to dispose of transferable property not his own, is competent to transfer such property either whol....
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....to be computed with reference to the approval granted by the Charity Commissioner for the sale of the property, bearing in mind the public purpose underlying such approval. The Department was, therefore, right in considering the form in question as invalid. " Mr. Naik sought to submit that the view taken by the Bombay High Court in Madhukar Sunderlal Sheth's case [1992] 198 ITR 594, has been overruled in a subsequent case in J. Gala Enterprises Estate and Investments Pvt. Ltd. v. W. Hassan, CIT [1995] 216 ITR 110. But, I find the contention to be erroneous, because the factual premise leading to challenge of the orders passed by the appropriate authority were quite different in the two cases ; and as such in the latter case the first was found to be distinguishable. In the first case, as noticed hereinafter the court had found the agreement of sale to be unenforceable, whereas in the second case it has been observed that : " It cannot be said that the said agreement for transfer entered into by and between the first petitioner and respondents Nos. 6 to 8 is contrary to law or void. " Now, I may proceed to discuss the decisions cited at the Bar on behalf of the petitioners.....
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....rty was done in accordance with or contrary to the municipal laws, and that he could have merely acted by either exercising the right of purchase with all the defects, shortcoming and limitations of the property which was the subject-matter of the statement or he should have issued a certificate of "no objection". In the case of Mrs. Satwant Narang v. Appropriate Authority, I.T. Department [1991] 188 ITR 656 (Delhi), the petitioner was undisputedly found to be the owner of the freehold immovable property which was the subject-matter of the statement filed in Form No. 37-I. Here also the appropriate authority refused to act on the said statement by alleging that the division of the property between the petitioner and his son was irregular and illegal being violative of the provisions of the municipal bye-laws. The court found such consideration to be extraneous and issued a direction for issuance of no objection certificate under section 269UL of the Act. In the case of Tanvi Trading and Credits P. Ltd. v. Appropriate Authority [1991] 188 ITR 623 (Delhi), the facts needs to be noticed in slightly greater detail. In this case the transferee was the petitioner before the High Co....
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....re the Supreme Court against the judgment in Tanvi Trading and Credits' case [1991] 188 ITR 623 (Delhi), which was dismissed by the Supreme Court by its order in Appropriate Authority v. Tanvi Trading and Credits P. Ltd. [1991] 191 ITR 307, which reads as under : " Counsel for the petitioners fairly tells us that a 'no objection certificate' was issued as early as on January 15, 1991. The suggestion that it was issued under pressure and threat of a contempt proceeding is made out from the record. We agree that two alternatives are open under the scheme of the legislation : (i) the Union of India through the appropriate authority could buy the property, or (ii) in the event of its decision not to buy, it has to issue a 'no objection certificate' leaving it open to the parties to deal with the property. In that view of the matter, the High Court was right in its conclusion. The special leave petition is dismissed. No costs. " The judgment of the Delhi High Court as approved by the Supreme Court with the observations noticed above has been followed in the cases of Megsons Exports v. Union of India [1992] 194 ITR 225 ; Irwin Almedia v. Union of India [1992] 197 ITR 609 (....