TMI Blog1996 (6) TMI 48X X X X Extracts X X X X X X X X Extracts X X X X ..... tuated at Worli and that in June, 1992, he entered into an agreement for the sale of the said flat for a consideration of Rs. 45 lakhs and in view of the provisions of section 54 of the Income-tax Act, 1961 (hereinafter referred to as " the Act "), the petitioner was required to invest the sale proceeds in another residential flat to obtain tax benefits. Hence, on June 22, 1992, the petitioner entered into an agreement for the purchase of the flat in question from respondents Nos. 5 and 6 for a consideration of Rs. 38 lakhs. The petitioner paid Rs. 3.80 lakhs as earnest money. As per the agreement, the balance was required to be paid within a period of 15 days from the date of receipt of the NOC from the income-tax authorities under Chapter XX-C of the Act, On June 23, 1992, the petitioner and respondents Nos. 5 and 6 filled in Form No. 371. It is the contention of the petitioner that on June 23, 1992, the property was inspected by the Valuation Officer and in the valuation report he deducted an amount of Rs. 65,151 as discount for 120 days which would be the time to be taken by the appropriate authority for passing an order under Chapter XX-C and for paying the consideration. He a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earing the petitioner and the vendor, the impugned order dated March 25, 1994, was passed. That order was challenged by filing the present petition on April 21, 1994. Subsequently, on July 27, 1994, the earlier Writ Petition No. 2096 of 1992, which had challenged the order of compulsory purchase dated August 27, 1992, was withdrawn. At the time of hearing of this petition, learned counsel for the petitioner vehemently submitted that the impugned order passed by the appropriate authority is arbitrary and that the sale instances relied upon by it clearly established that there is no undervaluation or, in any case, it is not more than 15 per cent. of the fair market value arrived at by the appropriate authority. In the present case, the appropriate authority has, while passing the first order, relied on the following three sale instances : ANALYSIS OF THE COMPARABLE THREE INSTANCES RELIED UPON BY THE VALUATION OFFICER, APPROPRIATE AUTHORITY --------------------------------------------------------------------------------------------------------------------------------------------------- Case No. Details of Value Built up Rate per Rate per and Date property (Rs.) area sq. f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e order dated September 24/25, 1992, is inadvertent which occurred in the order because of the description given in column No. 7 of Form No. 37-1 where the description of the property is given as bungalow No. 2 with terrace. While passing the first order, perhaps the number of the bungalow, viz., 2 was wrongly attached with terrace, thus describing the property as bungalow with two terraces. Subsequently, this was rectified as one terrace. In fact, as stated earlier, though there is terrace above but this is not attached with the subject property exclusively. It seems that while inspecting the property at the time of passing the first order dated August 27, 1992, the portion of balcony was taken as terrace. Be that as it may, on our inspection, we found that the subject property consists of three bed rooms, one kitchen, one drawing-cum-dining room and one closed balcony, two toilets (one attached) and a servant toilet. The built-up area is the same as given in the report of the Valuation Officer. With this preliminary clarifications, we may now deal with the arguments of the learned representatives. " Further, it is also clarified that the terrace is not accounted for in the buil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd to the first three sale instances on the basis of which the first order was passed, they clearly indicate that the apparent consideration paid by the petitioner was the fair market rate per square foot. We would also note that the sale instances were with regard to bungalows while the petitioner has purchased a flat. As against this, learned counsel for the respondents referred to and relied upon the sale instance dated April 24, 1992, which indicates that flat No. 51 in Chitrakoot, Khar, Bombay, admeasuring 1,380 square feet, was sold at the rate of Rs. 4,218 per square foot. However, we fail to appreciate this contention because the appropriate authority has not specifically relied upon the said sale instance for arriving at the conclusion that the fair market value of the subject property would be Rs. 46 lakhs on the basis of the said sale instance. In this view of the matter, the impugned order is without application of mind and, therefore, arbitrary and hence is required to be set aside. However, at this stage, learned counsel for respondents Nos. 5 and 6 raised a contention that because of the interim order passed by this court, respondents Nos. 5 and 6 were deprived ..... X X X X Extracts X X X X X X X X Extracts X X X X
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