TMI Blog1982 (12) TMI 13X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act directing acquisition of the, building. Against this order there were five appeals, four by the purchasers and the fifth by Kasturilal, which were all allowed by the Tribunal by a common order dated May 7, 1980, and the order of the competent authority was set aside. It is against this order that the Department has filed Miscellaneous (First) Apeals Nos. 220, 248, 254, 256 and 263, all of 1980, under s. 269H of the Act to this court which are being disposed of by this common order. Moti Building is an old building. It was constructed some time in 1886. The future life of the building was estimated to be fifteen years in 1977. The building has two wings, one is double storeyed and the other is partly double storeyed and partly three storeyed. The ground floor, except a few portions in the rear, is used as shops, whereas the rest is residential. The built up area is 3,155 sq.m. There are temporary country tiled huts measuring 142.00 sq.m. in open land. The open land left out is 65.00 sq.m. The condition of the building in 1977 was very poor and the same was out of maintenance since long. Certain portions in the rear fell down, affecting the adjacent portions. The building ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtificate of sale and obtaining confirmation of sale, the valid title and absolute ownership would vest with Shri Trilokinath Dubey and others ". It appears that the purchasers deposited a bank draft dated May 9, 1977, for Rs. 1,05,000 with the TRO, Bombay, who on May 11, 1977, wrote to Kasturilal that the deposit was provisionally accepted to consider the feasibility to adjust the same towards tax arrears. It was further stated in this letter that the matter has been referred to the Commissioner (Acquisition Range), Bhopal. The IAC (Acquisition Range), Bhopal, Shri R. K. Bali, by his letter dated June 23, 1977, wrote to the IAC, AV-Range, Bombay, that on the basis of the valuation report of the Asst. Valuation Officer, Jabalpur, the fair market value has been determined at Rs. 1,05,000 and that no acquisition proceedings would be initiated if the property known as Moti Building is sold for Rs. 1,05,000. On June 30, 1977, Kasturilal wrote to the TRO, Jabalpur, that with the permission of the I.T. Dept., Bombay, the property known as Moti Building had been sold to Trilokinath and others. On the same date, the TRO, Bombay, wrote to the TRO, Jabalpur, that the Commissioner of Incometa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ransfer with the object of evading the liability of the transferor to pay tax. (v) The sale was by the I.T. Dept. and not by Kasturilal and s. 269C was not attracted to such a sale. The competent authority rejected all these contentions and held that the fair market value of the property exceeded the apparent consideration by more than 15% and that the conditions for the application of s. 269C were fully satisfied. In appeal the purchasers and Kasturilal repeated all the contentions which were advanced before the competent authority. The Tribunal held that the sale was a sale by private negotiation and not by the I.T. Dept. But it further held that the fair market value of the property did not exceed the apparent consideration for the transfer; that the acquisition proceedings were barred by limitation as notices under s. 269D(2) were not served on the purchasers and Kasturilal within nine months; and that the IAC (Acquisition Range) was estopped from taking proceedings under s. 269C on the ground of promissory estoppel. The learned standing counsel for the Department in support of these appeals has challenged the adverse findings of the Tribunal. The learned counsel appearin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the standing counsel came to know on March 31, 1981, of the death of Kasturilal. Thereafter, prompt action was taken to find out the names of his legal representatives and necessary applications were made on June 21, 1981. Now, as Kasturilal had died before the filing of the appeal, there is no question of any abatement of the appeal. All that is necessary is to join the legal representatives of Kasturilal as respondents as they were the only proper persons who ought to have been shown as respondents in the appeal. It is true that on June 21, 1981, when the application to join them was made, the period of limitation for filing appeal against them had expired but the delay in the special circumstances of the case could be condoned under s. 5 of the Limitation Act, 1963. In our opinion, there was sufficient cause for the delay in filing the appeal against the legal representatives of Kasturilal and this is a fit case where the discretion under s. 5 of the Limitation Act should be exercised. The learned counsel for the legal representatives of Kasturilal, however, submitted that s. 5 has no application in view of the special provision made in the proviso to s. 269H(1) of the I. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same reason, be held to be barred by Yes judicata. Now, we take up the point relating to the fair market value of the property which is the most important point in these appeals. According to the report of the Assistant Valuation Officer, Shri Gupta, dated June 14, 1977, the market value of the building worked out to Rs. 92,000 on the basis of capitalisation of rental income and the offer of the purchasers of Rs. 1,05,000 represented the fair market value. Shri Gupta estimated the life of the building to be fifteen years. The net rental income was determined to be Rs. 10,780. Capitalising the net annual income, allowing interest on capital at 5% and for redemption of capital at the same rate, for fifteen years, the capital value was determined at Rs. 1,11, 896 by using 10.38 as the multiplier. Out of this amount, Rs. 20,000 were deducted for repairs of the collapsed portion and other portions and the net market value was estimated to be Rs. 91,896. The competent authority in disagreeing with this valuation report, referred to another valuation report made on October 16, 1973, in which the fair market value was reported to be Rs. 136,700. The competent authority's opinion was tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hority itself stated that the gross rental of Moti Building was 4 1/2 times more than that of the house. If Moti Building is divided into four or five blocks and each block is sold separately that may fetch higher price but that is not the criterion to be adopted here. As the house sold under the sale deed dated September 27, 1977, is much smaller in size, this sale cannot furnish a safe guide for determination of the fair market value of Moti Building. Further, we do not know as to what was the condition of this house when it was sold. The condition of Moti Building as, we have already mentioned, was deplorable. In 1977, it was estimated to last only for fifteen years as it was in complete disrepair and a part of it had already fallen down. The Tribunal has observed that the sale deeds referred to by the competent authority could not be used as comparable sales and we agree with that finding. The learned standing counsel for the Department has laid great emphasis on a point which was neither taken before the competent authority nor before the Tribunal that the Asst. Valuation Officer in giving his report of June, 1977, has not considered the salvage value of the building which o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of continued disrepair, it was in a very bad shape in 1977. Therefore, merely because an offer of Rs. 1,71,000 was made in 1957, it cannot be held that the fair market value in 1977 of that building would be more. I The learned standing counsel also submitted that the tenants of Moti Building had formed themselves into a co-operative society and had offered Rs. 3 lakhs for purchasing it. The learned standing counsel was, however, unable to show any material on record to show that any offer of Rs. 3 lakhs was made by any one before the building was sold. Any offer made after the building was sold cannot be taken seriously. Having regard to all the circumstances of the case, we do not accept the argument of the learned standing counsel that the Tribunal committed any error of law in reaching the finding that the fair market value of the building on the date of transfer did not exceed Rs. 1,05,000. It is well recognised that the determination of fair market value of a capital asset is generally a matter of estimate based, to some extent, on guess-work and despite the utmost bona fides, the estimate of the fair market value is bound to vary from individual, to individual (See K. P. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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