Appropriate Authority And Commissioner, Income Tax v. Smt. Varshaben Bharatbhai Shah And Ors

APPROPRIATE AUTHORITY AND COMMISSIONER, INCOME TAX v. SMT. VARSHABEN BHARATBHAI SHAH AND ORS. MARCH 13, 2001 [S.P BHARUCHA, N. SANTOSH HEGDE AND Y.K. SABHARWAL, JJ.] Income Tax: Income Tax Rules, I962: Rule 48-K. Immovable prope11y-Sale of-Apparent consideration for-Pre-emptive [c ] purchase of-Co-owners entered into agreement for sale of immovable prop-e1ty fora certain apparent consideration, ivhich exceeded the prescribed limit for the relevant area under R. 48-K-Under the agreement co-owners sought to transfer their equal half sha1~s in the said propel1y-High Cou11 held that Chapter XX-C of Income Tax Act not"applicable since each co-owner would get less than the prescribed limit-C01rectness of-Held: Ifthe apparent consid-erationfor transfer of immovable propel1y is more than the prescribed limit for the relevant area and is less than the market value thereof by 15% or more, notice for pre-emptive purchase can be issued-It is of no consequence that the apparent consideration ivith respect to each transferor is less than the pre-scribed limit-Immovable prope1ty is the subject of transfer and not the one half shares of the co-own~r.,-llence, Chapter XX-C_ is clearly applicable-Income Tax Act, i96J, Ss. 269-UC, 269-UD and Chapter XX-C. The second and third respondents entered into an agreement to sell to the first respondent immovable property for an apparent consideration, which was more than the prescribed limit for the relevant area under Rule 48-K of the Income Tax Rules, 1962, The appropriate authority of the Revenue came to the conclusio_n that the apparent consideration was less than the market value in respect of the said property hy 15 % or more, Accordingly, an order of pre-emptive purchase of the said property was made under Section 269-UD of the Chapter XX-C of the Income Tax Act, 1961, The respondents challenged the aforesaid order in a writ petition before the High Court contending that under the agreement respondents Nos, 2 and 3 sought to transfer their equal half shares in the said property, 349 [2001] 2 S.C.R The High Court held that each co-owner would get less than the prescribed limit under Rule 48-K of the Rules and, therefore, tbe provisions of Chap-ter XX-C of the Act would not apply. Hence this appeal. Allowing the appeal, the Court HELD : 1. What has to be seen for the purposes of attracting Chapter XX-C of the Income Tax Act, 1961 is what is the property which is the subject-matter of transfer and what is the apparent consideration for such transfer. This has to be seen in a real light "ith due regard to the object of the chapter and not in an artificial or technical manner. If the apparent consideration for the transfer is more than the limit prescribed for the relevant area under Rule 48-K of the Income Tax Rules, 1962 what has then to be seen is whether the apparent consideration for the property is less than the market value thereof by 15% or more. If so, notice for pre-emptive purchase can be issued and it is then for the parties to the transac-tion to satisfy the appropriate authority that the apparent consideration is the real consideration. [356-H; 357-A] 1961 .