TaxTMI 
TaxTMI 
1985 (2) TMI 37
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.... (ii) A. Premchand, (iii) A. Hukmichand, and (iv) B. Parasmal of Bangalore (" transferees") for a sum of Rs. 2,00,000. On March 21, 1974, an inspector attached to the office of the IAC reported the said transfer to the IAC. On in examination of that report, the details of the property and the apparent consideration stipulated in the instrument of transfer, recording his reasons thereto on the same or next day as required by s. 269C of the Act, to the effect that the fair market value of the property exceeded the apparent consideration by more than 15 per cent., directed the issue of notices on that very day under s. 269D of the Act. While the notice issued under s. 269D(1) of the Act was published in the Government of India Gazette dated July 6, 1974 (vide Part-III(1) at page 4050), the notices issued to the transferees and transferor under s. 269D(2)(a) of the Act were served on March 29, 1974, and April 2, 1974, respectively. In conformity with this and other provisions of that very section, notices on the tenant who was in occupation of the building, on the notice board of the office of the IAC, on a conspicuous part of the property and the locality were also effected. In ....
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....r determination and they are: (i) Whether the issue of notices to the appellants under s. 269D(2)(a) of the Act, before the publication of the notice under s. 269D(1) of the Act in the Official Gazette, vitiates the jurisdiction of the IAC and the order made by him thereto under Chapter XX-A of the Act ? (ii) Whether the determination of fair market value of the property by the Tribunal and the IAC are legal and valid ? We will deal with them in their order. Re: Point No. 1 Sri Srinivasan has urged that the Tribunal committed an error of law in allowing the belated additional ground urged by the appellants before it and the acceptance of the same was plainly illegal. Sri Sarangan has sought to support the decision of the Tribunal on the very grounds found by it and other grounds also which will be noticed and dealt by us in due course. Before the IAC, the appellants did not urge that the notices issued to them under s. 269D(2)(a) before the publication of the notice in the Official Gazette vitiated his jurisdiction and the proceedings initiated against them were ab initio void. In their objections before the IAC, the appellants did not object to his jurisdiction on t....
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....ineffective and in the absence of any new notice served on the persons concerned after the publication of the notice in the Official Gazette, the proceedings could not be said to have been properly initiated. " In reaching this conclusion, the Tribunal followed an earlier decision rendered by it in I.T. (Acq.) Nos. 15 to 16 of 1974-75 dated April 20, 1975, which is also in challenge before us in I.T. As. Nos. 23 and 24 of 1976 in which also it has accepted a similar ground concurring with the views expressed by the Bombay Income-tax Appellate Tribunal ('Bombay Tribunal') in Smt. Hirubai Kisan Koli v. IAC, Acquisition Range (I. T. Appeals Nos. 231 to 235 (Bom.)/74-75 dated December 2, 1974) on similar facts and on a similar ground urged before that Tribunal. We have carefully read the order made by the Tribunal challenged in I.T.A. Nos. 23 and 24 of 1976 and the order made by the Bombay Tribunal in Hirubai Kisan Koli's case. We find it difficult to hold that the conclusions of the Tribunal in these cases can be understood as one of inherent want of jurisdiction. We are of the view that the conclusions appear to suggest and hold that the defect, if any, was only an irregularity....
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....sance of matters presented in a formal way for its decision. The limits of this authority are imposed by the statute, charter or commission under which the court is constituted, and may be extended or restricted by similar means. " In Raja Soap Factory v. Shantharaj, AIR 1965 SC 1449, the Supreme Court dealing with the question whether this court had original jurisdiction to entertain a civil suit or not and grant a temporary injunction, explained the meaning of the said term in these words (pp. 1450-51): " Jurisdiction of a court means the extent of the authority of a court to administer justice prescribed with reference to the subject-matter, pecuniary value and local limits ... By 'jurisdiction ' is meant the extent of the power which is conferred upon the court by its constitution to try a proceeding; its exercise cannot be enlarged because what the learned judge calls an extraordinary situation ' requires ' the court to exercise it. " Amnon Rubinstein in his Treatise " jurisdiction and Illegality " explains the fundamental concept of jurisdiction very tersely thus: " A general theory of jurisdiction, which stands for purity of concept, claims to solve the dilemma. Bri....
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....onstitution of the country or by a law made by a competent legislature and not by the act or consent of parties. When a court, tribunal or an authority has not been invested with jurisdiction, meaning " the power to decide " or " competence to decide " but still decides a matter, it is outside its jurisdiction or in excess of its jurisdiction and that cannot be cured by the Act or consent of parties. Rubinstein clearly explains this principle neatly in his Treatise "jurisdiction and. Illegality " in these words " Want of jurisdiction denotes action taken beyond the sphere allotted to the tribunal by law and, therefore, outside the area within which the law recognises a privilege to err. Furthermore, want of jurisdiction is regarded as usurpation of power unwarranted by law. Consequently, it is considered so radio" a defect that it cannot be cured by the acquiescence or consent of the, parties concerned jurisdiction does not originate in the consent of the parties and cannot be re-established, where it is absent, by such consent or acquiescence. Being independent of the parties' behaviour, want of jurisdiction can be raised by any person wherever the resulting act is relied upon.....
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....ny doubt, Parliament with due regard to the interests of the State and the persons affected by the extraordinary powers conferred on the authorised IAC, has placed many limitations and safeguards in the exercise of the extraordinary powers conferred by Chapter XX-A of the Act. But, all those limitations and safeguards cannot be treated as touching on the jurisdiction of the authority to acquire if the circumstances contemplated in Chapter XX-A exist, however conforming with the requirements of the provisions made therein. Every error committed by the IAC in the exercise of his own jurisdiction, cannot be treated as outside his own jurisdiction. They are all errors in but not of jurisdiction. We are clearly of the view that the errors, if any, committed by the IAC in issuing notices under s. 269D(2)(a) before the publication of the notice in the Gazette was an error within his own undoubted jurisdiction and was not a case of " assumption of jurisdiction " or usurpation of power or outside the jurisdiction of the IAC and the Tribunal in holding otherwise and invalidating the proceedings on that ground was clearly in error. Sri Sarangan has urged that the jurisdiction of the IAC to....
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.... Sri Sarangan has urged that the locality notices and individual notices must follow the notice published in the Official Gazette and those requirements in all their details were mandatory and any disobedience in the performance of any of the Acts renders every one of the proceedings under the Act ab initio void. Section 269D does not provide for the publication of the notice in the Official Gazette first and then only for service of locality notices and individual notices to the transferees and transferor and the person in occupation of the property. Section 269D of the Act does not provide for such a formal compliance and much less for invalidation on the failure of such formal compliance at all. After all, the locality notice and the individual notices are effected only to provide a better opportunity to the affected persons and persons claiming interest in the property and not for any other purpose. The service of notices is not an end in itself but is only a means to afford a proper opportunity and adjudicate the matter fairly and justly. Section 269E providing for the filing of objections within 45 days from the date of publication in the Gazette or a period of 30 days fro....
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....of the IAC and vitiates the proceedings before him We, therefore, hold that the conclusion reached by the Tribunal on point No. I is erroneous in law and the same calls for our interference. Re., Point No. II. Sri Sarangan has urged that the fair market value of the property was as stated in the instrument of transfer and the finding to the contrary recorded by the Tribunal overlooks or ignores the correct legal principles in that it had failed to allow 40 per cent. as outgoings on the rental value of the property. In support of his contention Sri Sarangan has strongly relied on a Division Bench ruling of the High Court of Gujarat in CIT v. Smt. Vimlaben Bhagwandas Patel [1979] 118 ITR 134 followed and approved by a Division Bench of this court consisting of Venkatachaliah and Vithala Rao JJ. in Special Land Acquisition Officer (Railways), Mangalore v. C. P. Mohammed (M.F.A. No. 468 of 1975 decided on II/12-2-1980). Sri Srinivasan in supporting the finding of the Tribunal has urged that the Tribunal had correctly applied the rental value method as expounded by a Division Bench of this court in CWT v. V. C. Ramachandran [1966] 60 ITR 103 and of the Calcutta High Court in CED v....
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....se and found the fair market value of the property at Rs. 2,70,300 and on this basis sustained the finding of the IAC that the fair market value was more than 25 per cent. of the apparent consideration. Both sides have not taken exception to the rental method of valuation adopted by the Tribunal and the IAC. Bat, their objection is on the working of that method and the extent of outgoings to be allowed. Both sides have pressed hard their respective view-points and urged to give finality to these proceedings somewhat regretfully pending before this court itself for nearly a decade. We will first examine whether the correct principles of valuation have been applied and whether the evidence on the record enables us to finally determine the case. The fair market value of the property must be determined as on the date on which the transaction is recorded in the instrument of transfer and not before that or thereafter also. The term " fair market value " in relation to immovable property transferred by way of sale, that being the position in the present case, has been defined in 269A(d) of the Act, as " the price that the immovable property would ordinarily fetch on sale in the ....
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....acquired. Normally, the method of capitalising the actual or immediately prospective profits or the rent of a number of years' purchase should not be resorted to if there is evidence of comparable sales or other evidence for computation of the market value. It can be resorted to only when no other method is available. 8. It is axiomatic that the best evidence to prove what a willing purchaser would pay for the land under acquisition would be the evidence of sales of comparable properties, proximate in time to the date of acquisition, similarly situate and possessing the same or similar advantages and subject to the same or similar disadvantages. Market value is the price the property may fetch in the open market if sold by a willing seller unaffected by the special needs of a particular purchaser. Where definite material is not forthcoming either in the shape of sales of similar lands in the neighbourhood at or about the date of notification under section 4(1) or otherwise, the court has no other alternative but to fall back upon the method of valuation by capitalisation. In valuing land or an interest in land for purposes of land acquisition proceedings, the rule as to number o....
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.... of the availability of the property, its use, potential or prospective, and all other elements which combine to give a piece of property market value.' The learned author then deals with the fixation of market value on the basis of rental income at pp. 226-229 and states: ' It is far sounder practice to avoid the use of rental value capitalisation, if better evidence of market value is available. In any event, the courts are inclined to give greater weight to sales of similar properties in the market than to evidence of leasehold rentals. Jahr then deals with the method of capitalisation of income and says at P. 230: ' It is quite evident from the formula that the lower the rate of return applied, the higher the capitalised sum will be. However, the rate of return on money invested is dependent upon many varied factors; (1) safety of principal; (2) liquidity of investment; (3) certainty of income (4) possible market fluctuations; (5) appreciation of principal or income and undoubtedly other elements too numerous to mention. The interest rate current in the security market must be considered, as well as the investment rate to be obtained from high grade bonds or common ....
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....h property changes ownership. The utilisation of these data in the appraisal process is known as the sales analysis approach and is generally conceded to be the most accurate basis for the determination of property value, provided there have been a sufficient number of transactions that have occurred reasonably near the time of the appraisal and for which reliable data are available. It is necessary to analyse the conditions under which transactions take place before accepting the price as a valid indication of the market value of the property because some exchanges take place under abnormal conditions. 37. Sales information is not restricted necessarily to transactions that have been consummated, although it is obvious that these are the most conclusive evidences of value. Offers to sell, and offers to buy, provided they are genuine, also provide valuable data to be given consideration. Asking prices, in the nature of things, probably are indications of maximum value; and bid, prices are probably indications of minimum value. The true value no doubt is an amount between these limits. 38. In addition to being one of the best evidences of market value, the use of sales data in....
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....therwise. As seen earlier, the Tribunal and the IAC have resorted to the rental method without even attempting to ascertain on the comparable sales method and its non-availability on the facts and circumstances. From this also, it follows that their orders cannot be upheld. We will assume that the facts and circumstances justified the application of the rental method. But, then also, that method, as very rightly pointed out by the Gujarat High Court in Vimlaben Bhagwandas Patel's case [1979] 118 ITR 134, with which this court has expressed its concurrence in Mohammed's case, cannot be applied in isolation and to the exclusion of other recognised methods of valuation. Even here, the Tribunal and the IAC have not applied this principle and evidence has not been placed on all the available methods. From this also, it follows that a remand to the IAC becomes inevitable. We are of the view that the principles stated by this court in Ramachandran's case [1966] 60 ITR 103, in determining the estimated value of immovable property on the date of valuation, for purpose of s. 7 of the W.T. Act for every assessment year, has no relevance to decide the fair market value of the property as....