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2016 (9) TMI 560 - BOMBAY HIGH COURT

2016 (9) TMI 560 - BOMBAY HIGH COURT - [2017] 392 ITR 394 - Demand of unearned incremental charges - whether payment of unearned incremental charges demanded by the Collector of Mumbai is the responsibility of the Appropriate Authority as the assignor of the leasehold interest or of the Petitioners as the auction purchaser? - Held that:- The relevant clause of the lease deed gave an option to the Collector to require payment of half unearned incremental charges in the event of any assignment or .....

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ority, is without any substance. - Writ Petition No. 2868 of 1991 - Dated:- 1-9-2016 - M. S. Sanklecha And S. C. Gupte, JJ. Mr. D.V. Deokar, Advocate and Ms. Jaylaxmi C. Gaud, i/b. M/s. Parimal K. Shroff & Co., for the Petitioners Ms. Jyoti Chavan, AGP - Mr. Abhay Ahuja, a/w. Mr. Ranit Basu, for the Respondent JUDGMENT ( Per S.C. Gupte, J. ) This petition is filed under Article 226 of the Constitution of India by Petitioners, who are auction purchasers of a property acquired by the Appropria .....

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g with the industrial building constructed thereon. This property was given on lease by the Government of Maharashtra through Additional Collector, Mumbai Suburban District to one M/s. Superphone India Ltd. ( Superphone ) for a term of 30 years at an annual rent and on terms and conditions set out in the lease. By an agreement between Superphone and one M/s. Scitech Center ( Scitech ), Superphone agreed to sell, transfer and assign this property for a consideration of ₹ 64,19,700/to Scitec .....

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he public auction, the Petitioners, as highest bidders in the auction sale, were declared the purchasers of the property. The Petitioners paid the purchase price to the Appropriate Authority and were put in possession of the property. Subsequent to this purchase, whilst the matter of execution of the conveyance was pending, the Collector of Mumbai raised a demand for ₹ 3,42,000/as unearned incremental charges payable to the Collector in accordance with the terms of the original lease conse .....

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ce/demand is challenged by the Petitioners in the present petition. 3. At the outset it is important to note that the Petitioners do not challenge the demand of unearned incremental charges raised by the Collector of Mumbai per se. What they challenge is the fastening of the liability to pay such charges on the Petitioners as auction purchasers. It is their case that these charges ought to be paid by the vendor, i.e. the Appropriate Authority. 4. The demand of unearned incremental charges is mad .....

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nt half the unearned increment in the event of any assignment underletting or transfer as above whether out right or as a result of an unredeemed mortgage and every such assignee, underlessee or transfer or shall use the said plot only for the purpose of which it has been let out under the terms hereto. It is the case of the Appropriate Authority that the property was auctioned by the Income Tax Department on as is where is basis and any liability accruing subsequent to the sale or any liability .....

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auction sale. The relevant conditions of the auction sale, which are not in dispute, are set out below : 12. All expenses for conveyance including legal charges, stamp duty and registration fees, as applicable, will have to be borne but the purchaser. The purchaser will also have to pay all out-standings pertaining to the property. Details of outstandings known to the I.T. Department will be announced at the time of the auction. 16. The properties are sold in the same state and condition as the .....

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or any other relevant laws/regulations etc. as the case may be. In accordance with these conditions, it is only the outstandings known to the IT Department, which have to be announced at the time of the sale. The sale itself is on as is where is basis. If any demand is made towards any outstandings pertaining to the property, which were not known at the time of the auction, the responsibility to honour such demand is clearly that of the auction purchaser. The clause unequivocally requires the p .....

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ission or consent in writing of the Collector of Bombay or Additional Collector, as the case may be, for effectuating the transfer of the auction premises and to pay any demand of unearned increment is that of the assignors. The submission is that the Appropriate Authority, after vesting of the property under Chapter XXC of the Income Tax Act, steps into the shoes of the assignors, namely, Superphone. We are afraid that is not a correct reading of the law. The vesting has occurred in the present .....

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