TMI Blog2011 (11) TMI 471X X X X Extracts X X X X X X X X Extracts X X X X ..... Formula and rational of such adjustment is not stated and cannot be fathomed from the impugned order. In these circumstances, we allow the present writ petition and quash the order dated 22.3.1995 and set aside the said order. See Kailash Suneja Vs. Appropriate Authority (2001 (8) TMI 10 - SUPREME COURT) – Decided in favor of petitioner. - W.P. (C) 1286/1995 - - - Dated:- 11-11-2011 - MR. JUSTICE SANJIV KHANNA, MR. JUSTICE R.V.EASWAR, JJ. For Appellant: Mr. C. Mukund, Advocate with Ms. Firdouse Qutb Wani, Advocate. For Respondent : Ms. Rashmi Chopra, Advocate. SANJIV KHANNA, J: (ORAL) M/s. Wire Fabriks (S.A.) Ltd. has filed the present Writ Petition for issue of writ of Certiorari and quashing of the order dated 22nd March, 1995 passed by the respondent No. 1-Appropriate Authority under Section 269 UD(1) of the Income Tax Act, 1961 (Act, for short). 2. The petitioner had entered into an agreement dated 18.12.1994 with Mr. K. A. Sethi and Ms. C.K.Handa, respondents No. 3 4 to purchase Flat No. 802, Madhuban, 55, Nehru Place, New Delhi measuring 896 sq.ft. (hereinafter referred to as the property) for total consideration of Rs. 24,19,200/-, which includ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t No. 1 would be free to re-auction the property forthwith. 5. Thereafter, the petitioner filed an application being CM No. 2321/98, which was disposed of on 17.4.1998. The court in this order noticed the factual background and the orders passed including judgment of this Court in Kailash Suneja Vs. Appropriate Authority, (1998) 231 ITR 318 (Del.) and passed the following directions: (i) subject to the petitioner filing an undertaking on an affidavit through its attorney or a senior official duly authorized under a resolution of the Board in the terms indicated hereinafter, the possession of the property shall be delivered to the petitioner; the possession of the petitioner shall be in the capacity of a receiver; he shall not alter the status quo, nor create third party interest, nor part with possession nor create any encumbrance in favour of a third party; (ii) The petitioner shall undertake that in the event of the petition being dismissed and respondents No. 1 and 2 being held entitled to compulsory purchase of the property, the petitioner shall hand over peaceful vacant possession to respondents 1 and 2 within the time appointed by the court . 6. In terms of the said ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... properties in this locality are considered. Your attention is invited to the sale instance of flat no. 512 Ansal Tower, Nehru Place, New Delhi for an apparent consideration of Rs. 15,53,750/-. This sale instance property was agreed to be sold as per Agreement dated 30.11.1993 and consisted of built up area of 424 sq. ft. Therefore, the unit rate per sq. ft. comes to Rs. 15,53,750/- 424 = Rs. 3665/- per sq. ft. If an adjustment of time gap @ 1% per month at +13% and floor difference of (--) 3% is made, the rate on the basis of this sale instance comes to Rs. 3665 X 1.10 = Rs. 4031 per sq. ft. Therefore, the value of the subject property/flat on the basis of their sale instance works out to Rs. 4031 X 981 sq. ft. Rs. 39,54,411/- as against the apparent consideration disclosed at Rs. 23,01.000/- 4. You are hereby given an opportunity as being heard in this matter and show cause as to why pre-emptive purchase order U/s 269 UD (1) of the Income Tax Act should not be made. For this purpose, you may appear before the Appropriate Authority on 21.3.1995 at 10.30 A.M. either personally or through (sic) your authorized representative. You are also requested to produce before the Appropri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns were not so restrictive than as construction of Ansal Tower at present when the building Ansal Tower is D.D.A. regulations were more constructed. restrictive than at the time of construction of Madhuban. 8. The building Madhuban is inside and not 8. The building Ansal Tower is on on main road and have no private parking main road and have better facility. approach and have private parking facility. 9. The office in question is in eight floor which 9. The office compared is in 5th is a top floor just below the roof which is also in a 15 storied building. a shed back to the value of the office space. Note: An office accommodation of about 2000 sq. ft. in the building Ansal Tower has been agreed to be sold in 14th floor some time in May 1994 for a total consideration of Rs. 54.64 lacs i.e. Rs. 2732/- per sq. ft. Thus agreement for sale of office space in a old building on 8th floor at Rs. 2568/- per sq. ft. is at a fair market price in Dec. 1994. 10. The second contention raised in the reply dated 18.3.1995 was that difference of one per cent for each floor referred to in the show cause notice dated 10th March, 1995 was merely an presumption without any evidence and de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an Tower is located inside and is not on the main road, whereas Ansal Tower is on the main road and has private parking facility. Another distinguishing factor pointed out by the petitioner was that the property in question was located on the 8th Floor, the top floor, and the built up area was 896 sq. ft., whereas the sale instance of Ansal Tower relied upon to the Appropriate Authority was of a flat on the 5th Floor in a fifteen story building and of a smaller size having a built up area of 424 sq. ft. 15. The Appropriate Authority did notice the said differences in their order dated 22.3.1995 and has stated that in view of the said differences, they would adjust 5% for superior location and another 5% towards other amenities. The order dated 22.3.1995 does not state or explain on what basis, only 10% adjustment in all was allowed. Formula and rational 10% deduction in all for factors mentioned above is not stated and cannot be fathomed from the impugned order. The differences pointed out by the petitioner are substantial and not innocuous or insignificant. These were relevant and material considerations which are taken into account by every seller or purchaser before purchasi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment potential of the properties considered and barsati potential is taken into account. Taking into account the subject properties tenanted, 6 years deferred value at 8% is calculated and 6 years rent is added to the value arrived at by the above process. 18. In the same judgment, it has been further observed at page 449 as under: The agreement in respect of property G-8, Maharani Bagh, New Delhi, had been entered into in June, 1991, whereas the agreement for the property in question is dated July 1, 1993. We find no legal basis by adding 24 per cent on the hypothetical basis that there would be an increase of 1 per cent every month. 19. The aforesaid decision was made subject matter of the challenge by Appropriate Authority before the Supreme Court in the case of Appropriate Authority Vs. Kailash Suneja and the said decision is reported in (2001) 6 SCC 563. The Supreme Court noticed the adverse observations of the High Court on the mode of calculation of fair market value by adding 1% per month in view of the time gap and did not interfere with the said reasoning. 20. It may be noticed here that the appropriate authority, on the basis of the sale instance, has come ..... X X X X Extracts X X X X X X X X Extracts X X X X
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