advocatemmmohan

My photo

ADVOCATEMMMOHAN -  Practicing both IN CIVIL, CRIMINAL AND FAMILY LAWS,Etc.,

WELCOME TO LEGAL WORLD

WELCOME TO MY LEGAL WORLD - FOR KNOWLEDGE IN LAW & FOR LEGAL OPINIONS - SHARE THIS

Friday, November 6, 2015

This appeal is preferred by the appellants, who suffered an order of compulsory pre-emptive purchase under Chapter XXC of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) passed by the Appropriate Authority under Section 269UD of the Act.Chapter XXC. This Court observed in C.B. Gautam’s case (supra), as follows: “As we have already pointed out the provisions of Chapter the provisions of Chapter XX-C can be resorted to only where there is a significant undervaluation of property to the extent of 15 per cent or more in the agreement of sale, as evidenced by the apparent consideration being the lower than the fair market value by 15 per cent or more. We have further pointed out that although a presumption of an attempt to evade tax may be raised by the appropriate authority concerned in case of the aforesaid circumstances being established, but such a presumption is rebuttable and this would necessarily imply that the parties concerned must have an opportunity to show cause as to why such a presumption should not be drawn. Moreover, in a given transaction of an agreement to sell there might be several bona fide considerations which might induce a seller to sell his immovable property at less than what might be considered to be the fair market value. For example: he might be in immediate need of money and unable to wait till a buyer is found who is willing to pay the fair market value for the property. There might be some dispute as to the title of the immovable property as a result of which it might have to be sold at a price lower than the fair market value or a subsisting lease in favour of the intending purchaser. There might similarly be other genuine reasons which might have led the seller to agree to sell the property to a particular purchaser at less than the market value even in cases where the purchaser might not be his relative. Unless an intending purchaser or intending seller is given an opportunity to show cause against the proposed order for compulsory purchase, he would not be in a position to rebut the presumption of tax evasion and to give an interpretation to the provisions which would lead to such a result would be utterly unwarranted. The very fact that an imputation of tax evasion arises where an order for compulsory purchase is made and such an imputation casts a slur on the parties to the agreement to sell lead to the conclusion that before such an imputation can be made against the parties concerned, they must be given an opportunity to show cause that the undervaluation in the agreement for sale was not with a view to evade tax. Although Chapter XX-C does not contain any express provision for the affected parties being given an opportunity to be heard before an order for purchase is made under Section 269-UD, not to read the requirement of such an opportunity would be to give too literal and strict an interpretation to the provisions of Chapter XX-C and in the words of Judge Learned Hand of the United States of America “to make a fortress out of the dictionary”. Again, there is no express provision in Chapter XX-C barring the giving of a show-cause notice or reasonable opportunity to show cause nor is there anything in the language of Chapter XX-C which could lead to such an implication. The observance of principles of natural justice is the pragmatic requirement of fair play in action. In our view, therefore, the requirement of an opportunity to show cause being given before an order for purchase by the Central Government is made by an appropriate authority under Section 269-UD must be read into the provisions of Chapter XX-C”. The High Court has failed to render a finding on the relevance of comparable sale instances, particularly, why a sale instance in an adjoining locality has been considered to be valid instead of a sale instance in the same locality. The other aspects of the impugned order of the appropriate authority in the earlier part of judgment seems to have been missed. In the result, we find that the appeal deserves to be allowed and is hereby allowed. The impugned order dated 20.02.2004 passed by the High Court of Bombay at Nagpur is set aside. Consequently, order dated 29.07.1994 passed by the appropriate authority under Section 269UD (1) of the Act is also set aside. There will be no order as to costs.

                                                                  REPORTABLE

                        IN THE SUPREME COURT OF INDIA

                        CIVIL APPELLATE JURISDICTION

                       CIVIL  APPEAL No. 430  OF 2007





UNITECH LTD. & ANR.                                   .. APPELLANT(S)



                             VERSUS

UNION OF INDIA & ANR.                                ..RESPONDENT(S)




                                 1 JUDGMENT



S. A. BOBDE, J.



1.    This appeal is preferred by the appellants, who suffered an  order  of
compulsory pre-emptive purchase under Chapter XXC of  the  Income  Tax  Act,
1961 (hereinafter referred to  as  ‘the  Act’)  passed  by  the  Appropriate
Authority under Section 269UD of the Act.

2.     Vidarbha  Engineering  Industries  -  Appellant  No.  2  (hereinafter
referred to as ‘Vidarbha Engineering’) holds on lease, three plots  of  land
admeasuring 2595.152 sq mtrs i.e. 27934 sq  ft  at  Dahipura  and  Untkhana,
Nagpur (hereinafter referred to  as  the  ‘subject  land’).   This  land  is
comprised of three plots of land i.e. Plot Nos. 34, 35 and  36  obtained  by
Vidarbha  Engineering  from  the   Nagpur   Improvement   Trust.    Vidarbha
Engineering decided  to  develop  the  subject  land  and  entered  into  an
agreement for the purpose with Unitech Ltd. (herein  after  referred  to  as
‘Unitech’).  The Memorandum of Understanding  between  them  was  formalized
into a collaboration agreement dated 17.03.1994.  Under this  agreement  the
land holder agreed to allow Unitech to develop and  construct  a  commercial
project on the subject land admeasuring 2595.152 sq mtrs  at  the  technical
and financial cost of the latter. The parties to the agreement agreed,  upon
construction of the multi storied  shopping  cum  commercial  complex,  that
Unitech will retain 78% of the total constructed area and  transfer  22%  to
the share of Vidarbha Engineering.  Unitech agreed  to  create  an  interest
free security deposit of  Rs.  10  lakhs.   50%  of  the  deposit  was  made
refundable on  completion  of  the  RCC  structure  and  the  other  50%  on
completion of the project.  The parties were  entitled  to  dispose  of  the
saleable  area  of  their  share.  It  was  specifically  agreed  that  this
agreement was not to be construed as a partnership between the parties.   In
particular,  this  agreement  was  not  to  be  construed  as  a  demise  or
assignment or conveyance of the subject land.  It  is  significant  to  note
that the agreement does  not  contain  any  clause  by  which  Unitech,  the
developer, is to pay  any  consideration  in  terms  of  money  to  Vidarbha
Engineering, the land holder. The only consideration apparently provided  is
the entitlement of Vidarbha Engineering to 22% of the  constructed  area  in
the proposed multi storied building.

3.    The appellant submitted a statement in Form 37-I under  Section  269UC
of the Act annexing the agreement dated 17.3.1994.  According to  Shri  V.A.
Mohta,  the  learned  senior  counsel,   this   form   contains   only   the
nomenclatures  of  transferor  and  transferee  and  contemplates  only  the
transaction  of  a  transfer  and  not  an  arrangement  of   collaboration.
Therefore,  the  appellants  were  constrained  to  describe  themselves  as
transferor  and  a  transferee.   Accordingly,  they  mentioned   that   the
consideration for the transfer of the subject property was  Rs.100.40  lakhs
towards the cost of share of 22% of Vidarbha Engineering, which  was  to  be
constructed by Unitech – builder at its own cost.  This submission was  made
as  a  preface  to  the  contention  that  in  fact  and  in  law,  Vidarbha
Engineering has not transferred the property held  by  it  to  Unitech,  but
that it has only allowed  Unitech  to  make  a  construction  on  the  land.
Indeed,  we  have  considered  this  submission  notwithstanding  the   self
description of the parties as transferor and transferee  since  it  involves
the true construction of a document which is always a  substantial  question
of law. We find much substance in  the  contention.   In  the  first  place,
Vidarbha Engineering itself is a lessee holding the  land  on  lease  of  30
years from Nagpur Improvement Trust.  It has no authority  to  transfer  the
land.  Secondly, no  clause  in  the  agreement  purports  to  transfer  the
subject land to  Unitech.   On  the  other  hand,  clause  4.6  specifically
provides that nothing in the agreement shall be construed to  be  a  demise,
assignment or a conveyance.  The agreement thus creates a licence in  favour
of Unitech under which the latter may enter upon the land  and  at  its  own
cost build on it and thereupon handover 22% of the  built  up  area  to  the
share of Vidarbha Engineering as consideration and retain 78% of  the  built
up area.  By the statement in Form 37-I the consideration  has  been  valued
by the parties at Rs. 1,00,40,000/-.

4.    It was contended by Shri Mohta,  the  learned  senior  advocate,  that
since the agreement does not  purport  to  transfer  any  land  by  Vidarbha
Engineering to Unitech, Chapter XXC of the Act  itself  has  no  application
and no pre-emptive  purchase  could  have  been  ordered  by  the  competent
authority.  Shri Mohta  points  out  that  the  provisions  of  Chapter  XXC
providing for pre-emptive purchase by the Central Government only deal  with
transfer by way of sale, exchange or lease  or  admitting  as  a  member  by
transfer of shares in a cooperative society or by way  of  an  agreement  or
arrangement which has the effect of transferring or enabling  the  enjoyment
of the said property and  that  none  of  this  can  cover  a  collaboration
agreement of the kind entered into by the appellants; vide sub-clause   (ii)
of clause (f) of sub section (2) of Section 269UA of the Act[1].

5.      It may appear  at  first  blush  that  the  collaboration  agreement
involves an  exchange  of  property  in  the  sense  that  the  land  holder
transfers his property to the developer and the developer transfers  22%  of
the constructed  area  to  the  land  holder  but  on  a  closer  look  this
impression is quickly dispelled.  Exchange is defined vide  Section  118  of
the Transfer of Property Act, 1882 as a mutual transfer of the ownership  of
one thing for the ownership of  another[2].   But  it  is  not  possible  to
construe the license created by Vidarbha Engineering in  favour  of  Unitech
as a transfer or acquisition of 22% share of the constructed building  as  a
transfer in exchange.  As observed earlier Vidarbha Engineering  is  not  an
owner but only a lessee of the land.  As such,  it  cannot  convey  a  title
which it does not possess itself.   In fact,  no  clause  in  the  agreement
purports to effect a  transfer.    Also  in  consideration  of  the  licence
Unitech has agreed that the Vidarbha Engineering will have a  share  of  22%
in the constructed area.  Thus it appears that what is contemplated is  that
upon construction  Unitech  will  retain  78%  and  the  share  of  Vidarbha
Engineering will be 22% of  the  built  up  area  vide  clause  4.6  of  the
agreement[3]. Thus the transaction cannot be construed as a sale,  lease  or
a licence.  At  this  juncture  it  would  be  important  to  construe  this
transaction in terms of clause (d) of sub-section (2) of  Section  269UA  of
the Act, the provision which defines immovable  property[4].   In  terms  of
Section 269UA(2)(d) of the Act ‘Immovable property’ consists of :-

(a) not  only  land  or  building  vide  sub-clause  (i) but also

(b) any rights in or with respect  to  any  land  or  building  including  a
building which is to be constructed.

‘Transfer’ of such rights in or with respect to  any  land  or  building  is
defined in clause (f) of sub-section (2) of Section 269UA of the Act as  the
doing of anything which has the effect  of  transferring,  or  enabling  the
enjoyment of, such property. Thus the  question  whether  the  collaboration
agreement constitutes transfer of property must be answered  with  reference
to clauses (d) and (f) which defines immovable property  and  transfer.   It
is clear from  the  agreement  that  the  transfer  of  rights  of  Vidarbha
Engineering in its land does not amount to any sale, exchange  or  lease  of
such land, since, only possessory rights have been  granted  to  Unitech  to
construct the building on  the  land.   Nor  is  there  any  clause  in  the
agreement expressly transferring 22% of the building to  Vidarbha  after  it
is  constructed  by  Unitech.   Clause  4.6  only   mentions   that   as   a
consideration for Unitech agreeing to develop the property it  shall  retain
78% and the share  of  Vidarbha  Engineering  will  be  22%.   In  fact  the
Parliament has defined  “transfer”,  deliberately  wide  enough  to  include
within its scope such agreements or arrangements which have  the  effect  of
transferring all the important rights  in  land  for  future  considerations
such as part acquisition of shares in buildings to be constructed, vide sub-
clause (ii) of clause (f) of sub-section (2) of Section 269UA.  There is  no
doubt that the collaboration agreement can be construed as an agreement  and
in any case an arrangement which has the effect of transferring and  in  any
case  enabling  the  enjoyment,   of   such   property.   Undoubtedly,   the
collaboration agreement enables Unitech to enjoy the  property  of  Vidarbha
Engineering for the purpose of construction. There is also no doubt that  an
agreement  is  an  arrangement.  It  must  therefore  be   held   that   the
collaboration agreement effectuates a transfer  of  the  subject  land  from
Vidarbha Engineering to Unitech within the meaning of the  term  in  Section
269UA of the Act.  It appears to be  the  intention  of  the  Parliament  to
cover  all such transactions by which valuable rights  in  property  are  in
fact transferred by one party to another for consideration, under  the  word
“transfer”,  for  fulfilling  the  purpose  of  pre-emptive  purchase   i.e.
prevention of tax evasion.  A Judgment of the  Patna  High  Court  in  Ashis
Mukerji v. Union of India and Ors[5] cited before us takes the view  that  a
development agreement is covered by the definition of  transfer  in  Section
269UA.  We note the same with approval.

SHOW CAUSE NOTICE

6.    Upon the submission of the statement under Section 269UA of  the  Act,
the Appropriate Authority issued a show cause notice dated 8.7.1994  stating
that the consideration for  the  transaction  appears  to  be  too  low  and
appears to be understated by more  than  15%,  having  regard  to  the  sale
instance of a land in Hanuman Nagar, an adjoining locality.  The show  cause
notice contains the following table:

|                                |P.U.C.                  |Sale instance      |
|                                |                        |property           |
|File No.                        |214                     |210                |
|Dt. of agreement                |17.3.1994               |1.3.1994           |
|Description of property         |Land bearing Plot No.   |Land at Sur. No. 19|
|                                |34, 35, 36, Ind. Area   |Sheet No. 32, Ward |
|                                |Scheme NIT. Dahipura and|No. 10, Hanuman    |
|                                |Untkhana, Rambag Rd.    |Nagar, Nagpur.     |
|                                |Nagpur                  |                   |
|Consideration: Apparent         |1,00,40,000/-           |19,50,000/-        |
|Land Area                       |2024.22 sq. ft.         |736 sq. mtrs.      |
|F.S.I. available                |56473 sq. ft.           |6877 sq ft.        |
|Rates per sq. ft. of FSI        |Rs. 184/-               |Rs. 283/-          |
|apparent                        |                        |                   |


7.    It is obvious from the table that the authority  took  the  price  the
consideration for the land to be Rs. 1,00,40,000/- (rupees one  crore  forty
thousand) which  is  the  consideration  stated  by  the  appellant  in  the
statement as a consideration for the transfer of subject property i.e.  plot
nos. 34, 35 and 36 admeasuring 2595.152 sq. mtrs.  = 27,934 sq  ft.   It  is
however, difficult to imagine how or why the authority  has  considered  the
consideration to be for 56,473 sq ft (of available FSI). This has  obviously
resulted in showing a lower  price  of  Rs.184/-  per  sq  ft  of  FSI   and
enabling  the  authority  to  draw  a  prima  facie  conclusion   that   the
consideration is understated by more than 15%  in  comparison  to  the  sale
instance for which the price appears to be Rs. 283/- per sq ft of  FSI.   If
the  authority  had  to  take  into  account  the   consideration   of   Rs.
1,00,40,000/- for 27,934 sq  ft  to  a  piece  of  land  as  stated  by  the
appellants the rate would have been Rs. 359.41 per sq ft.  and the  rate  of
the sale instance would have been Rs. 246.14 per sq  ft.    The  authorities
thus committed a serious error in taking the  consideration  quoted  by  the
appellants for the entire subject land i.e. 27,934 sq  ft  as  consideration
for the transfer of the available FSI i.e. 56,473 sq ft.   thus  showing  an
unwarranted undervaluation.

8.    Moreover, as rightly contended by  Shri  Mohta  the  authorities  have
treated the consideration for subject land, which is an industrial plot,  as
understated by more than 15% on the basis of  a  sale  instance  of  a  land
which is in a residential locality.  More importantly, it  is  obvious  that
the area of the sale instance is of a much smaller plot  i.e.  736  sq  mtrs
whereas the subject land which is said to have been undervalued is 2,024  sq
mtrs.   It is well known that the price of a small  residential  plot  would
be more than a large industrial plot.   The  show  cause  notice  which  has
subsequently been confirmed is vitiated by a gross non-application of  mind.


9.    In reply to the  show  cause  notice  the  appellants  raised  several
objections  to  the  alleged  undervaluation  including  the  existence   of
encumbrances and the aspects  mentioned  hereinabove.   In  particular,  the
appellants pointed out a sale instance of a comparable case approved by  the
authorities where the FSI cost on the basis of apparent consideration  comes
to Rs. 90/- per sq ft.  This was in respect of a property in the  very  same
locality in which the subject land is located.

ORDER UNDER SECTION 269UD OF THE INCOME TAX ACT

10.     The appropriate authority considered the  objections  filed  by  the
appellants and rejected them by  an  order  dated  29.07.1994  passed  under
section 269UD of the  Income  Tax  Act.   The  authority  rejected  all  the
objections taken by  the  appellants.   The  authority  validated  the  sale
instance relied on in the show cause notice without giving  any  finding  on
the specific objections raised.  It rejected the sale instance relied on  by
the appellants of a property in the same locality on the  ground  that  that
property does not have road on the  three  sides  like  the  property  under
consideration; there is a nallah carrying waste  water  near  that  property
and it has a  frontage  of  only  12.5  mtrs.   It  took  into  account  the
consideration of Rs. 1,00,40,000/- and deducted from it  an  amount  of  Rs.
24,09,600/- being discount calculated at the rate of 8% per annum since  the
consideration had been deferred for a period of three years.   It  therefore
determined the consideration for purchase of the  subject  property  at  Rs.
76,30,400/-.

11.   The authority fell into a gross and an obvious error while  conducting
this entire exercise of holding  that  the  consideration  for  the  subject
property  was  understated  in  holding  that   Vidarbha   Engineering   has
transferred property to the extent of 78% to Unitech.  There is  no  warrant
for this finding since Vidarbha Engineering was never to  be  the  owner  of
the entire built up area.  It only had a  share  of  22%  in  it.   Unitech,
which had built from its own funds, was to retain 78% share in the built  up
area.   And  in  any  case  the  appellants  had  never  stated   that   the
consideration for Rs. 1,00,40,000/- was in respect of the built up area  but
on the other hand had clearly  stated  that  it  was  for  transfer  of  the
subject land.  Thus, there was no evidence on record nor is any referred  to
in the order for coming to the  conclusion  that  Vidarbha  Engineering  had
transferred 78% of the built up area  to  Unitech  and  retained  22%.   The
order of appropriate authority thus suffers from a gross perversity.



IMPUGNED JUDGMENT OF THE HIGH COURT

12.   By the writ petition before the  High  Court,  the  appellants  raised
several contentions.  They  maintained  that  the  impugned  order  did  not
contain  any  finding  that  the  consideration  for  the  transaction   was
undervalued by the parties in order to evade taxes, which  is  the  mischief
sought  to  be  prevented.   Shri  Mohta,  the  learned   senior   advocate,
maintained  that  it  was  necessary  for  the  authority  to  come  to  the
conclusion that there is an attempt to  or  in  fact  an  evasion  of  taxes
before directing compulsory purchase.  The learned senior  counsel  referred
to a decision of the Bombay High Court in Amarjit  Thapar  v.  S.K.  Laul  &
Ors. [2008] 298 ITR 336.  The Bombay High Court observed as follows:

“The order of the Appropriate Authority is invalid and  void  ab  initio  as
there is no positive finding that there was an attempt  to  evade  tax.  The
Apex Court in the case of C.B.Gautam v. Union of  India  (1993)  1  SCC  78,
held that the very historical  setting  in  which  the  provisions  of  this
Chapter were enacted indicates that it was intended to be resorted  to  only
in  cases  where  there  is  an  attempt  to  evade   tax   by   significant
undervaluation of immovable property agreed to  be  sold.  In  the  case  of
Nirmal Laxminarayan  Grover  (supra),  this  Court  held  that  recourse  to
compulsory purchase of the immovable property; under  Chapter  XX-C  of  the
Act should be taken only in clear cases of gross undervaluation  from  which
the interference must clearly flow that it is done for evasion of taxes.
 In view of the judgment of the Supreme Court in C.B.Gautam (supra),  unless
the difference in the apparent effective consideration and the market  value
is more than 15%,  the  Appropriate  Authority  cannot  assume  jurisdiction
under section 269-UD of the Act. The same does not mean that the  mere  fact
that such difference is more than  15%  will,  automatically,  lead  to  the
conclusion that there has been undervaluation of property  with  the  motive
of evading tax. In Vimal Agarwal case (supra),  this  Court  has  reiterated
that right of pre-emptive purchase under section 269UD is  not  a  right  of
pre-emption simpliciter but is a right which can be exercised  only  in  the
cases where there is significant undervaluation in agreement of sale with  a
view to evade tax. The onus of establishing that undervaluation  is  with  a
view to evade tax is on the Revenue. No such finding is to be found  in  the
impugned order”.
It is not possible to agree with this view  in  its  entirety.   Undoubtedly
one of the objects of the provision  is  to  prevent  evasion  of  taxes  by
showing an undervaluation which is more than 15% of the true  value  of  the
property and which in turn carries an implication that some portion  of  the
value is not shown in the agreement  or  the  deed  but  passes  by  way  of
unaccounted money.  But it is not possible to say that it  must  be  alleged
in the show cause notice or a finding must be rendered  in  the  order  that
there is evasion of taxes as a sine qua non for  its  validity.  Nor  is  it
possible to hold that the onus of establishing undervaluation  with  a  view
to evade tax is on the revenue.  The  true  position  seems  to  be  that  a
significant undervaluation, greater than 15% below  the  fair  market  value
raises a rebuttable presumption that there is an  attempt  to  evade  taxes.
In C.B. Gautam’s case[6] this Court observed  that  an  allegation  of  such
undervaluation of more than 15% raises a rebuttable presumption  of  evasion
of taxes which renders an opportunity to show cause  necessary.   Therefore,
such an opportunity must be read into the provisions of Chapter  XXC.   This
Court observed in C.B. Gautam’s case (supra), as follows:

“As we have already pointed out  the  provisions  of  Chapter  XX-C  can  be
resorted to only where there is a significant undervaluation of property  to
the extent of 15 per cent or more in the agreement of sale, as evidenced  by
the apparent consideration being the lower than the fair market value by  15
per cent or more. We have further pointed out that  although  a  presumption
of an attempt to evade tax  may  be  raised  by  the  appropriate  authority
concerned in case of the  aforesaid  circumstances  being  established,  but
such a presumption is rebuttable and this would necessarily imply  that  the
parties concerned must have an opportunity to show cause as to  why  such  a
presumption should not be drawn. Moreover, in  a  given  transaction  of  an
agreement to sell there might be  several  bona  fide  considerations  which
might induce a seller to sell his  immovable  property  at  less  than  what
might be considered to be the fair market value. For example:  he  might  be
in immediate need of money and unable to wait till a buyer is found  who  is
willing to pay the fair market value for the property. There might  be  some
dispute as to the title of the immovable property as a result  of  which  it
might have to be sold at a price lower than  the  fair  market  value  or  a
subsisting  lease  in  favour  of  the  intending  purchaser.  There   might
similarly be other genuine reasons which might have led the seller to  agree
to sell the property to a particular  purchaser  at  less  than  the  market
value even in cases where the purchaser might not be  his  relative.  Unless
an intending purchaser or intending seller is given an opportunity  to  show
cause against the proposed order for compulsory purchase, he  would  not  be
in a position to rebut the  presumption  of  tax  evasion  and  to  give  an
interpretation to the provisions which would lead to such a result would  be
utterly unwarranted. The very fact that an imputation of tax evasion  arises
where an order for compulsory purchase is made and such an imputation  casts
a slur on the parties to the agreement to sell lead to the  conclusion  that
before such an imputation can be made against the  parties  concerned,  they
must be given an opportunity to show cause that the  undervaluation  in  the
agreement for sale was not with a view to evade tax. Although  Chapter  XX-C
does not contain any express provision for the affected parties being  given
an opportunity to be heard before  an  order  for  purchase  is  made  under
Section 269-UD, not to read the requirement of such an opportunity would  be
to give too literal and  strict  an  interpretation  to  the  provisions  of
Chapter XX-C and in the words of Judge Learned Hand of the United States  of
America “to make a fortress out of  the  dictionary”.  Again,  there  is  no
express provision in Chapter XX-C barring the giving of a show-cause  notice
or reasonable opportunity to  show  cause  nor  is  there  anything  in  the
language of Chapter XX-C which  could  lead  to  such  an  implication.  The
observance of principles of natural justice is the pragmatic requirement  of
fair play  in  action.  In  our  view,  therefore,  the  requirement  of  an
opportunity to show cause being given before an order for  purchase  by  the
Central Government is made by an appropriate authority under Section  269-UD
must be read into the provisions of Chapter XX-C”.

13.   The High Court has failed to render a  finding  on  the  relevance  of
comparable  sale  instances,  particularly,  why  a  sale  instance  in   an
adjoining locality has been  considered  to  be  valid  instead  of  a  sale
instance in the same locality. The other aspects of the  impugned  order  of
the appropriate authority in the earlier part  of  judgment  seems  to  have
been missed.

14.   In the result, we find that the appeal deserves to be allowed  and  is
hereby allowed.  The impugned order dated  20.02.2004  passed  by  the  High
Court  of  Bombay  at  Nagpur  is  set  aside.   Consequently,  order  dated
29.07.1994 passed by the appropriate authority under Section  269UD  (1)  of
the Act is also set aside. There will be no order as to costs.





                                                     ……………….…..........…..J.
                                                            [MADAN B. LOKUR]



                                                .......................………J.

                                                                [S.A. BOBDE]
NEW DELHI,
NOVEMBER 4, 2015
-----------------------
[1]    Section 269UA. Definition – In this Chapter, unless the context
otherwise requires, -
      xxxxxxx
      (f) “transfer”,-
      (i) in relation to any immoveable property referred to  in  sub-clause
(i) of clause (d), means transfer  of  such  property  by  way  of  sale  or
exchange or lease for a term of not less than  twelve  years,  and  includes
allowing the possession of such property to be taken  or  retained  in  part
performance of a contract of the nature referred to in Section  53A  of  the
Transfer of Property Act, 1882 (4 of 1882):
      Explanation- For  the  purpose  of  this  sub-clause,  a  lease  which
provides for the extension of the term thereof by a further  term  or  terms
shall be deemed to be a lease for a term of not less than twelve  years,  if
the aggregate of the term for which such lease is  to  be  granted  and  the
further term or terms for which it can be  so  extended  is  not  less  than
twelve years;
      (ii) In relation to any immoveable property of the nature referred  to
in sub-clause (ii) of clause (d), means the doing of  anything  (whether  by
way of admitting as a member of or  by  way  of  transfer  of  shares  in  a
cooperative society or company or other association of persons or by way  of
any agreement or arrangement or in any other manner  whatsoever)  which  has
the effect of transferring or enabling the enjoyment of, such property.

[2]    Section 118 “Exchange”  defined.-When two persons  mutually  transfer
the ownership of one thing for the ownership of another,  neither  thing  or
both things being money only, the transaction is called “exchange”.
      A transfer of property in completion of an exchange can be  made  only
in manner provided for the transfer of such property by sale.
[3]    clause 4.6 :  As a consideration for the  SECOND  PARTY  agreeing  to
develop the said project land in phases and in the manner specified  herein,
the SECOND PARTY shall be entitled to retain 78% of  the  total  constructed
area of the multi-storeyed shopping-cum-commercial  project  and  the  FIRST
PARTY’s share will be 22% of the same.  This constructed area shall  include
the area in the basement, if there will be any.
[4]    Section 269UA (2)(d) “immovable property” means-
      any land or any building or part of a building,  and  includes,  where
any land or any building  or  part  of  a  building  is  to  be  transferred
together with any machinery, plant, furniture,  fittings  or  other  things,
such machinery, plant, furniture, fitting or other things also.
      Explanation.- For the purposes of this  sub-clause,  “land,  building,
part of a building, machinery, plant, furniture, fittings and other  things”
include any rights therein.
      any rights in or with respect to any land or any building  or  a  part
of a building (whether or not including  any  machinery,  plant,  furniture,
fittings or other things therein) which has been constructed or which is  to
be constructed, accruing or arising from any transaction (whether by way  of
becoming a member of, or acquiring  shares  in  ,  a  co-operative  society,
company or other association of persons or by way of any  agreement  or  any
arrangement of whatever nature), not being a transaction  by  way  of  sale,
exchange or lease of such land, building or part of a building;

[5]    [1996] 222 ITR 168
[6]    (1993) 1 SCC 78


No comments:

Post a Comment

Note: Only a member of this blog may post a comment.