TMI Blog2001 (3) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... le property situated in Ahmedabad for the sum of Rs. 47 lakhs. The appropriate authority of the Revenue came to the conclusion that the apparent consideration in respect of the said immovable property under the said agreement was less than the market value thereof by 15 per cent. or more. Accordingly, a notice dated November 6, 1995, was issued to the respondents to show cause why the said immovable 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 join ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... angement which they did on April 8, 1987, under the terms of which, each one of respondents Nos. 4 to 8 were allotted a definite share in the property. After April 8, 1987, they were individual owners of definite shares in the property. Each one could deal with only his respective share and he cannot deal with the share of another. The property which so fell to the share of each individual will 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a) thereof to mean an agreement for the transfer of any property. "Property" is defined by clause (d) to mean any land or any building or part of a building and any rights in or with respect to any land or any building or a part of a building. "Transfer" in relation to any property means, by reason of clause (f), the transfer of such property by way of sale or exchange or lease for a term of 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 immovabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Income-tax Rules, 1962, states that the value of any immovable property for the purposes of sub-section (1) of section 269UC shall be, where the agreement for transfer prescribed under the said subsection is entered into after July 31, 1995, Rs. 25 lakhs for the city of Ahmedabad. In C. B. Gautam v. Union of India [1993] 199 ITR 530, a Constitution Bench of this court dealt 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 aut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and third respondents owned the said immovable property as tenants-in-common or that this is how they had shown their ownership in their income-tax returns. We are, therefore, of the opinion that the High Court was in error in concluding that what had been sold by the second and third respondents to the first respondent was their equal share in the said immovable property, that the apparent consideration was, therefore, less than Rs. 25 lakhs and that, therefore, the provisions of Chapter XX-C would not apply. We should add that even if the agreement of transfer had been so drawn as to show the transfer of the equal shares of the second and third respondents in the said immovable property, our conclusion would have been the same for, looked at realistically, it was the said immovable property which was the subject of the transfer. We are of the opinion that the judgments of the Madras, Karnataka, Delhi and Calcutta High Courts referred to above are based on a wrong approach and are erroneous. We approve of the view taken by the Bombay High Court in Jodhram Daulatram Arora's case [1996] 221 ITR 368. As we have pointed out, it was conceded before the High Court on behalf of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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