TMI Blog2000 (10) TMI 25X X X X Extracts X X X X X X X X Extracts X X X X ..... r is a public limited company having its registered office at Calcutta and a division at Chennai. The petitioner owns a property comprising the land and building situated at No. 10, First Avenue, Harrington Road, Chetput, Chennai-31. The property comprises land measuring three grounds 777 square feet with a residential building thereon. The fifth respondent is the owner of the property comprising land measuring five grounds and 1,552 square feet with residential building thereon situated at No. 1, Second Main Road, Gandhinagar, Adyar, Chennai-20. The petitioner desired to construct a housing complex for the benefit of its employees, They were informed that the fifth respondent owns a property comprising more than five grounds at Adyar. On an inspection, the petitioner was convinced that the said property would be eminently suitable for its purpose of putting up a housing complex as required by it. After discussions and after various proposals on either side, the petitioner and the fifth respondent came to an agreement that the property belonging to the petitioner and the property belonging to the fifth respondent could be mutually exchanged. Pursuant to the agreement between the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n terms of its letter dated June 9, 1997. Apart from submitting detailed objections, the petitioner submitted valuation reports as well as detailed technical objection from a registered valuer apart from its own objections objecting to the assumption of the first respondent that there was an undervaluation of the petitioner's property and that the presumption of attempt to evade tax would arise. It is further stated that the petitioner is a public limited company of repute and there was no question of avoidance of tax in respect of the above transaction. The first respondent finally made an impugned order dated August 21, 1997, under section 269UD(1) of the Income-tax Act. In the said order, the first respondent arbitrarily rejected the various contentions submitted by the petitioner and did not also consider the various sale instances cited by the petitioner in support of its contention that there was no undervaluation by the petitioner as alleged by the first respondent. In such circumstances, having no other effective remedy, has filed Writ Petition No. 13303 of 1997. Since the fifth respondent/petitioner in the other Writ Petition (W. P. No. 15631 of 1997) has also raised sim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owing the fifth respondent as the transferor and the petitioner as the transferee in respect of the property at No. 1, Second Main Road, Gandhi Nagar, Adyar, belonging to the fifth respondent, two statements in Form No. 37-I were filed one showing the petitioner as transferor in respect of the property at Harrington Road belonging to the petitioner and the other showing the fifth respondent as the transferor in respect of the property at Gandhi Naga]belonging to the fifth respondent. After rectifying certain errors that were noticed in the statements, a fresh set of statements in Form No. 37-I were filed rectifying the errors, on May 5, 1997. While so, on May 19, 1997, the petitioner received a show-cause notice relating to the property belonging, to the petitioner at Harrington Road, Chetput, Chennai, to show cause why order should not be made in respect of the above property in accordanance with the provisions of section 269UD of the Act. In the said notice, the first respondent referred to two sale instances in the past in the vicinity of the said property and came to the conclusion that there was a difference of 39.92 per cent. taking into account the first property and 36.74 p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e agreement of exchange and rejecting the statement in Form No. 37-I filed in respect of the said property as infructuous, is bad in law ; The first respondent has no jurisdiction to decide that there is an undervaluation in respect of one of the properties covered by exchange on the basis of the apparent consideration so estimated ; The appropriate authority is bound to determine whether the property so offered constitutes adequate consideration taking into account all surrounding circumstances. He cannot merely proceed on the basis of an estimate of value of one of the properties or both and come to the arbitrary conclusion that one of the properties is undervalued on the basis of sale instances referred to by him ; A mere statement that a presumption of attempt to evade tax arises would not be sufficient discharge of the obligation cast on the first respondent under Chapter XX-C ; The first respondent has cited two sale instances, both properties being situated in the Second Avenue, Harrington Road, Chennai. On the other hand, the property in respect of which the impugned order is passed is situated in the First Avenue, Harrington Road, Chennai. In view of the difference ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for transfer is made, being immovable property of the nature referred to in sub-clause (i) of clause (d), means, --- (i) if the immovable property is to be transferred by way of sale, the consideration for such transfer as specified in the agreement for transfer ; (ii) if the immovable property is to be transferred by way of exchange, --- (A) in a case where the consideration for the transfer consists of a thing or things only, the price that such thing or things would ordinarily fetch on sale in the open market on the date on which the agreement for transfer is made ; (B) in a case where the consideration for the transfer consists of a thing or things and a sum of money, the aggregate of the price that such thing or things would ordinarily fetch on sale in the open market on the date on which the agreement for transfer is made, and such sum ;" Section 269UB speaks about constitution of appropriate authority and section 269UC refers to restrictions on transfer of immovable property. Section 269UD enables the appropriate authority to pass orders for purchase by the Central Government of immovable property. As per sub-section (1A), before making an order under sub-section ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed senior counsel for the petitioner, by drawing my attention to section 269UA(b) of the Act, would contend that in respect of an exchange, the apparent consideration of the property which is sought to be transferred, would represent the market value of the property that is taken in exchange plus the money, if any, paid in addition to the property. Thus, according to him, applying the said definition, the apparent consideration for the property at Harrington Road belonging to the petitioner would represent the market value of the property at Adyar. .It is also stated that in terms of section 269UD(1), if the Government desires to purchase the property which is the subject-matter of an exchange, it should pay to the owner the market value of the property which is taken in exchange. Accordingly, it is further stated that the appropriate authority ought to have valued the Adyar property to determine the actual consideration that should be paid by the Government to the petitioner. It is argued that in the absence of valuation of the Adyar property by the appropriate authority, it is impossible for the appropriate authority to actually determine the consideration payable to the petition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ideline values are fixed by the registering authorities for the purposes of collection of stamp duty and that guideline values of land for the purposes of registration of an immovable property can have no application for determining the market value under Chapter XX-C of the Act. The appropriate authority has relied on a decision of the Rajasthan High Court in Krishna Kumar Rawat v. Union of India [1995] 214 ITR 610, wherein it was held that the market rates for the purpose of registration of an immovable property as notified by the Sub-Registrar can have no application for determining the market value under Chapter XX-C of the Act. It is further stated that it is limited only for payment of stamp duty. I am in agreement with the view expressed by the Rajasthan High Court. Further, the principles for valuation in respect of an immovable property under the Wealth-tax Act or other taxation laws are different from the principles which are applicable to acquisition proceedings. The proceedings under Chapter XX-C are akin to the acquisition proceedings and not to the valuation principles which are applicable for assessing the tax on the basis of the valuation of the property. A certain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cent. UDS out of depreciated 8,800 sq. ft. Bldg. cost for About 4,435 sq. ft. building (ii) Rs. 73,53,250 Year of construction--1963 (ii) Rs. 70,05,000 Frontage--24.08 mtrs. considering Road width--12.19 mtrs. scrap value Residential area. for building Transferee : S. 1. Property Inv. Ltd., Chennai. Apparent consideration Build up area. 5,000 sq. ft. at Rs. 1,000 per sq. ft. Rs. 50,00,000 Rs. 1,18,60,000 ---------------------------------------------------------- Total Rs. 1,68,00,000 ---------------------------------------------------------- Discounted consideration Rs. 1,61,36,000. ------------------------------------------------------------------------------------------------------------------------------------------------------- Though learned senior counsel for the petitioner would state that in both the sale instances the properties situate in Second Avenue whereas the property in question is in First Avenue hence the same cannot be compared, I am unable to accept the said contention in the light of the discussions by the appropriate authority. It is clear that both the sale instances relate to properties proximate in location to the su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 43,64,000 which indicates an appreciation of more than 1 per cent. per month. Here again, the appropriate authority have allowed 1 per cent. per month on the consecutive side for updating the land value. It is also clear that with regard to the first sale instance, "no objection certificate" has been issued for Rs. 1,50,00,000 which is also reflected in page 1 of the sale deed document No. 890 of 1996, the purchaser having paid and the seller having accepted the receipt of the amount. As rightly observed by the appropriate authority, this represents the true market value of the property. As stated earlier, for the purpose of collecting stamp duty, the value is apportioned between land and building, whatever value for land indicated by the vendor and the executant in the document is taken as base and stamp duty worked out. Hence, the value furnished by the petitioner based on the materials supplied by the Sub-Registrar cannot be accepted for valuing the property under Chapter XX-C. Though the second sale instance relating to the property at door No. 8, II Avenue, Harrington Road, is not registered, after considering all the relevant materials, the appropriate authority has issued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mited only to the extent of examining as to whether any finding is perverse or there is non-application of mind or the order is contrary to the established principles of law. This court is not sitting in appeal over the orders passed by the appropriate authority and the satisfaction has to be arrived at by the appropriate authority on the basis of the valuation report and the relevant documents which have been taken into consideration. Further, it is not the calculation or the manner which could be examined under article 226 of the Constitution of India. The calculation is always a question of fact. The principles of valuation alone have to be considered. I have already observed that the appropriate authority has considered the relevant sale instances and after allowing reduction to certain extent arrived at a correct conclusion. In this regard, it is useful to refer a decision of the Supreme Court in the case of Appropriate Authority v. Smt Sudha Patil [1999] 235 ITR 118. After discussing the provisions referred to in Chapter XX-C of the Act as well as power of this court under article 226 of the Constitution of India, the Supreme Court has observed that at : " . . . we are of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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