Fa/1466/1979 Of The Commissioner Of Income Tax v. Parshwanath Land Organisers

C/FA/1459/1979 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/FIRST APPEAL NO. 1459 of 1979With R/FIRST APPEAL NO. 1460 of 1979With R/FIRST APPEAL NO. 1461 of 1979With R/FIRST APPEAL NO. 1462 of 1979With R/FIRST APPEAL NO. 1463 of 1979With R/FIRST APPEAL NO. 1464 of 1979With R/FIRST APPEAL NO. 1465 of 1979With R/FIRST APPEAL NO. 1466 of 1979 FOR APPROVAL AND SIGNATURE: HONOURABLE MS.JUSTICE HARSHA DEVANISd/- andHONOURABLE MR.JUSTICE A.S. SUPEHIASd/-==========================================================1 Whether Reporters of Local Papers may be allowed to No/-see the judgment ?2 To be referred to the Reporter or not ?No/-3 Whether their Lordships wish to see the fair copy of the No/-judgment ?4 Whether this case involves a substantial question of law No/-as to the interpretation of the Constitution of India or any order made thereunder ?==========================================================THE COMMISSIONER OF INCOME TAXVersusMAHENDRA MILLS LTD,==========================================================Appearance:MRS MAUNA M BHATT(174) for the PETITIONER(s) No. 1========================================================== CORAM: HONOURABLE MS.JUSTICE HARSHA DEVANIandHONOURABLE MR.JUSTICE A.S. SUPEHIA Date : 02/08/2018 COMMON ORAL JUDGMENT (PER : HONOURABLE MS.JUSTICE HARSHA DEVANI) 1.The appellant Commissioner of Income Tax has challenged the order dated 31.07.1979, made by the Income-Tax Appellate Tribunal, Ahmedabad, Bench 'B', Ahmedabad, in Income Tax (Acquisition) Appeal Nos.1(Ahd)/79, 2(Ahd)/79, 3(Ahd)/79, 4(Ahd)/79, 6(Ahd)/79, 5(Ahd)/79, 7(Ahd)/79, 8(Ahd)/79 under section 269(H) of the Income Tax Act, 1961 (hereinafter referred to as the "Act") by proposing the following questions stated to be substantial questions of law: "(a) "Whether, on the facts in the circumstances of the case, the Income-Tax Appellate Tribunal erred in law in quashing and setting aside the order of the Competent Authority acquiring the property in question? (b) Whether, the Appellate Tribunal when accepted that apparent consideration would not be Rs.98,000/- as stated in the document of transfer, was justified in law in holding that the fair market value of the property would come to Rs.1,11,110/-? (c) Whether, the finding of the Appellate Tribunal that no work was done by Shree Ambica Construction Company either at the instance of the vendor or at the instance of the purchaser and that simply because the purchaser made payment of Rs.30,163/- to the said Ambica Construction Company, it cannot be said that the said Company did construction work for the purchaser at the instance of the vendor and that therefore, the said payment should form part of consideration is correct in law? (d) Whether, the valuation as adopted by the Income Tax Appellate Tribunal for the purpose of arriving at fair market value of the property in question at Rs,1,11,110/- is correct in law and sustainable from the material on record? (e) Whether, the conclusion reached by the Income Tax Appellate Tribunal in quashing and setting aside the order of the Competent Authority in acquiring the property under the provisions of Chapter XXA of the Act is erroneous in law and not sustainable from the material on record?" 2.All these appeals arise out of the common order dated 30.07.1979, passed by the Income-Tax Appellate Tribunal, Ahmedabad, Bench 'B', Ahmedabad (herein after referred to as the "Tribunal") and hence, the same were taken up for hearing together and decided by this common judgment. 3.The respondents in all these appeals are individual respondents, namely Mahendra Mills Limited, Ahmedabad viz.the purchaser, and the partners of M/s. Parshwanath Land Organizers. (e) Whether, the conclusion reached by the Income Tax Appellate Tribunal in quashing and setting aside the order of the Competent Authority in acquiring the property under the provisions of Chapter XXA of the Act is erroneous in law and not sustainable from the material on record?" 2.All these appeals arise out of the common order dated 30.07.1979, passed by the Income-Tax Appellate Tribunal, Ahmedabad, Bench 'B', Ahmedabad (herein after referred to as the "Tribunal") and hence, the same were taken up for hearing together and decided by this common judgment. 3.The respondents in all these appeals are individual respondents, namely Mahendra Mills Limited, Ahmedabad viz.the purchaser, and the partners of M/s. Parshwanath Land Organizers. 4.At the outset, it may be noted that these appeals of 1979 are still pending for adjudication before this court. However, there is no appearance on behalf of the respondents. The court has therefore, examined the merits of the case to ascertain as to whether the presence of the respondents is necessary. 5.Considering the view that the court is inclined to take the matters, after having gone through the record of the case as well as the common impugned order, the court finds that, it is not necessary to wait for the respondents to enter appearance. 6. These appeals came to be admitted by order dated 03.12.1979, however, no questions of law have been formulated at the relevant time. 7. The facts giving rise to the present appeals are as follow:- 7.1 The Mahendra Mills Ltd. Ahmedabad, agreed to purchase from M/s. Parshwanath Land Organizers ownership premises admeasuring about 1500 square feet on the second floor in Parshwanath Chambers, Near Harsiddh Chambers, Ashram Road, Ahmedabad. No written agreement to sell these premises was executed. On 9[th] August, 1973, the purchaser sent a cheque for Rs.66,000/- to the vendor stating that it was towards 75% payment on account of purchase of the said premises. The purchaser agreed to make the balance payment of 25% at the time of possession and/or final deed of purchase of the premises. Before the cheque for the balance was sent the purchaser was given to understand that the premises would be ready within one month. Permission for use of the building was given by the Municipal Corporation on 17.10.1973. On 07.12.1973, the purchaser sent a cheque of Rs.30,000/- to the vendor towards price of the premises in question. While sending the said cheque the purchaser stated that the balance amount will be paid at the time of final execution of documents. The purchaser paid to the vendor Rs.2,000/- on 19.03.1974 and to Shri Ambica Construction Company Rs.30,163.40/- which was received by that Company on 28.03.1974. The purchaser received from the vendor a bill dated 26.03.1974 for Rs.1700/- for brick partition. The purchaser took possession and occupied the premises from March, 1974. By a letter dated 15.05.1974, the purchaser informed the vendor that the purchaser had made full payment of Rs.1,26,163.40/- for the premises to the vendor and that the vendor had already given the possession of the premises. Final documents duly executed in favour of the purchaser were therefore called for. Sale-deed of the premises was executed in favour of the purchaser in consideration of Rs.98,000/-. In terms of the recitals contained in the document the construction work started before 1[st] July, 1972. 7.2The Sub-Registrar, Ahmedabad reported in his C/FA/1459/1979 JUDGMENT fortnightly report for the fortnight ended 15.09.1974 that the property in question was transferred by Parshwanath Land Organizers to Mahendra Mills Ltd. by a sale-deed registered on 05.09.1974 for an apparent consideration of Rs.98,000/-. 7.2The Sub-Registrar, Ahmedabad reported in his C/FA/1459/1979 JUDGMENT fortnightly report for the fortnight ended 15.09.1974 that the property in question was transferred by Parshwanath Land Organizers to Mahendra Mills Ltd. by a sale-deed registered on 05.09.1974 for an apparent consideration of Rs.98,000/-. 7.3The Inspecting Assistant Commissioner of Income-Tax who is the Competent Authority under the Act thereupon referred the matter to the Assistant Valuation Officer, Income-Tax Department, Ahmedabad for determination of the fair market value of the property in question as on the date of transfer. The said Valuation Officer submitted his report estimating the fair market value of the property in question at Rs.1,37,700/-The Competent Authority, therefore, formed a prima-facie opinion that the provisions of section 269-C were attracted and commenced proceedings for acquisition of the property in question under Chapter XXA of the Act. Requisite notices under section 269-D of the Act were published and served upon the parties concerned. The vendor filed objections by a letter dated 14.08.1975 and stated that the premises were sold at Rs.98,000/- without any addition to the construction and that Ambica Construction Company had undertaken certain work of extra construction and alterations etc. and that for the said work, the purchaser had paid to the said company an amount of Rs.30,163/-. Thus, the premises were sold for Rs.98,000/- and the purchaser had directly paid M/s. Ambica Construction Company an amount of Rs.30,163/- for the work done. The purchaser filed written objections on 24.12.1975. Along with the said written objections, a letter dated 19.08.1975 from Shri Ambica Construction Company was also filed. 7.4The vendor and the purchaser contended that the property was acquired for office use for Rs.1,28,163/- and not for Rs.98,000/-. The Competent Authority took the view that the value of the property on rental method taking net rent at Rs.1.15 per square foot would work out at Rs.2,27,500/- allowing 8% return. The Competent Authority examined Shri D.M. Patel, a partner of the vendor. He also examined a partner of Shri Ambica Construction Company. The Competent Authority was satisfied that in addition to the sale price of Rs.98,000/- as per the deed, the purchaser had paid Rs.30,163/- to Shri Ambica Construction Company. The Competent Authority on the basis of rental method adopted the fair market value of the property in question at Rs.1,37,700/-. He came to the conclusion that the fair market value of the property in question exceeded the apparent consideration by more than 15% of the apparent consideration and that the consideration for the transfer was not truly stated in the instrument of transfer with the object referred to in clause (a) and clause (b) of sub-section (1) of section 269-C of the Act, and passed an order accordingly. 8.The order of the competent authority came to be challenged by both, the vendor and the purchaser, by way of appeals before the Tribunal. By the impugned order, the Tribunal has set aside the order of the competent authority and has held that the fair market value of the property in question would not exceed the apparent consideration by more than 15%, as claimed by the appellant. 8.The order of the competent authority came to be challenged by both, the vendor and the purchaser, by way of appeals before the Tribunal. By the impugned order, the Tribunal has set aside the order of the competent authority and has held that the fair market value of the property in question would not exceed the apparent consideration by more than 15%, as claimed by the appellant. 9. Mrs. Mauna Bhatt, learned Senior Standing Counsel for the appellant assailed the impugned order passed by the Tribunal by submitting that the Tribunal, after having accepted that the apparent consideration of the property in question would not be Rs.98,000/-, as stated in the document of transfer was not justified in holding that the fair market value of the property would come to Rs.1,11,110/-. It was submitted that the method of valuation adopted by the Tribunal for the purpose of arriving at the fair market value of the property in question of Rs.1,11.110/- is erroneous and cannot be sustained from the material on record. It was, accordingly, urged that the appeals deserve to be allowed and the questions as proposed are required to be answered in favour of the appellant - revenue. 10. A perusal of the impugned order reveals that the Tribunal has, after appreciating the evidence on record, found that the actual area of the property in question was less than the area taken by the competent authority for the purpose of computing the valuation of the property in question. The Tribunal has further noted that the valuation of similar property ranged from Rs.270/- per square yard to Rs.300/- per square yard; however, the competent authority had adopted the rate of Rs.300/-. The Tribunal, after appreciating the evidence on record, has not believed the case of the vendor and the vendee, as regards the amount of Rs.30,163.40/- stated to have been paid to Shree Ambica Construction Limited for construction done during the subsistence of the agreement to sell. However, upon independently appreciating the material on record, the Tribunal has found that the fair market valuation of the property would come to Rs.1,11,110/- and has accordingly, found that the fair market value of the property would not exceed the apparent consideration even if it is taken at Rs.98,000/- by more than 15% and hence, the provisions of section 269(C) of the Act would not be attracted. 11.On a plain reading of the impugned order, it is evident that the Tribunal, after duly appreciating the evidence on record, has recorded findings of fact and has come to the conclusion that the fair market price value of the property in question would come to Rs.1,11,110/-. On behalf of the appellant, the learned counsel is not in a position to point out that the Tribunal has placed reliance upon any irrelevant material or that any relevant material has been ignored, nor has anything been brought to the notice of this court so as to dislodge the findings of fact arrived at by the Tribunal after appreciating the material on record. 12. Under these circumstances, the Tribunal having taken into account all the facts and circumstances relating to the questions of valuation and having arrived on its own conclusion as regards valuation of the property, it cannot be said that the decision of the Tribunal is perverse or based on irrelevant material. The conclusion arrived at by the Tribunal, being based upon the findings of facts recorded after appreciating the material on record, therefore, do not give rise to any question of law so as to warrant interference by this court in exercise of its powers under section 269H of the Act. 13. The appeals, therefore, fail and are accordingly, dismissed. 14.Registry is directed by place a copy of this judgment in each of the appeals. Sd/- (HARSHA DEVANI, J) GIRISH Sd/- (A. S. SUPEHIA, J)