Fa/1468/1979 Of The Commissioner Of Income Tax v. Shri Shailesh Jayendra Vankani (Minor)

C/FA/1467/1979 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/FIRST APPEAL NO. 1467 of 1979 With R/FIRST APPEAL NO. 1468 of 1979 FOR APPROVAL AND SIGNATURE: HONOURABLE MS.JUSTICE HARSHA DEVANI Sd/-Sd/- andHONOURABLE MR.JUSTICE A.S. SUPEHIASd/- ==========================================================1 Whether Reporters of Local Papers may be allowed to Nosee the judgment ?2 To be referred to the Reporter or not ?No3 Whether their Lordships wish to see the fair copy of the Nojudgment ?4 Whether this case involves a substantial question of law Noas to the interpretation of the Constitution of India or any order made thereunder ?==========================================================THE COMMISSIONER OF INCOME TAXVersusSHRI NARENDRAKUMAR PHULCHAND PARIKH========================================================== Appearance:MRS MAUNA M BHATT(174) for the PETITIONER(s) No. 1========================================================== CORAM: HONOURABLE MS.JUSTICE HARSHA DEVANI and HONOURABLE MR.JUSTICE A.S. SUPEHIA Date : 02/08/2018 COMMON ORAL JUDGMENT (PER : HONOURABLE MS.JUSTICE HARSHA DEVANI) C/FA/1467/1979 JUDGMENT 1.The appellant has challenged the order dated 03.03.1979, made by the Income-Tax Appellate Tribunal, Ahmedabad, Bench 'A', Ahmedabad (herein after referred to as the "Tribunal") in Income Tax (Acquisition) Appeal Nos.8(Ahd)/79 and 10(Ahd)/79, under section 269-F (6) of the Income Tax Act, 1961 (herein after referred to as the "Act") by proposing the following questions stated to be questions of law:- "(a) Whether, on facts and in the circumstances of the case, the Appellate Tribunal erred in law not up-holding the acquisition of the property subject matter of transfer by the transferor to the transferee under Chapter XXA of the Income Tax Act - 1961? (b) Whether, on the facts the case, the Income-tax Tribunal was right in law in holding that the proceedings for acquisition of property in question as initiated and completed by the Authority must fail as the fair market value on the basis of the principles enunciated by the Gujarat High Court would work out to Rs.73.500/- as against the apparent consideration shown at Rs. 75,000 (c) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in quashing and setting aside the order of the competent Authority dated 12/6/1978 made under section 269-F(6) of the Income-tax Act, 1961 (d) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in adopting the different method of the property, when the Competent Authority had adopted the correctly?". (e) Whether, on the facts and in the circumstances of the case, the appellate Tribunal was right in law in ignoring the fact that the entire property except for one room, was given on rent of Rs.1,175/- per month to five tenants and since the tenants had not disputed the rent paid, the question of adopting any other rent for standard rent did not arise? (f) "Whether, on the facts and in the circumstances of the case, the Appellate Tribunal has failed to appreciate the correct method for valuation of the property subject matter of transfer and coming to the conclusion that the fair market value of the property would be Rs. 73,500/- i.e. less than Rs.75,000/ being the apparent consideration for the transfer and consequently the acquisition proceedings must fail?" 2.The facts giving rise to the present appeal are as follows:- (f) "Whether, on the facts and in the circumstances of the case, the Appellate Tribunal has failed to appreciate the correct method for valuation of the property subject matter of transfer and coming to the conclusion that the fair market value of the property would be Rs. 73,500/- i.e. less than Rs.75,000/ being the apparent consideration for the transfer and consequently the acquisition proceedings must fail?" 2.The facts giving rise to the present appeal are as follows:- 2.1The Sub-Registrar, Rajkot, in his fortnightly return in Form No.37-H reported that an immovable property bearing House No.479, Ward No.12, standing on land admeasuring 468 sq.yds. and situated behind telegraph office, Rajkot (hereinafter referred to as the property), was transferred by Narendrakumar Phulchandbhai Parikh, Smt.Kalindi Narendrakumarbhai Parikh, Jogendra Narendrakumar Parikh, Henant Narendrakumar Parikh, Arvind Narendrakumar Parikh, ArunNarendrakumarParikh,Smt.Kananben Narendrakumar Parikh, legal heirs of the deceased Phulchand Parikh and coparceners of the HUF of Adarsh Society, Rajkot (herein after referred to as 'the transferors') to Shri Shailesh Jayendra Vankani (Minor) through natural guardian, Dr. Jayendra Keshavlal Vankani, ‘Shiv Sadan', Jasdan, Dist.Rajkot vide sale deed registered under registration No.1314 dated 2/7/1975 for an apparent consideration of Rs.75,000/-. 2.2The Inspecting Assistant Commissioner of Income-tax, Acq.Range-I, Ahmedabad, who is the Competent Authority (under Chapter XXA of the Act) directed his Inspector to make enquiry in this case. The Inspector visited the said property and submitted his report wherein it was recorded that except for one room, the entire property was given on rent of Rs.1,175/- per month to five tenants. For the vacant room, the estimated rent was taken at Rs.50/- per month. 2.3 Since the property was mainly tenanted, except for one room, the rental method was considered to be the correct method for valuation in this case. The fair market value on rental method was worked out at Rs.1,54,796/- as against the apparent consideration of Rs.75,000/-. 2.4 As the difference between the estimated fair market value and the apparent consideration worked out to more than 106% of the apparent consideration stated in the document of transfer, the Competent Authority came to the conclusion that the provisions of Chapter XXA of the Act were applicable. He therefore issued a notice under section 269D(1) of the Act for publication in the Official Gazette on 11.3.1976 and which was published on 10.4.1976. The individual notices were issued to the parties concerned on 30.4.76. 2.5 On 12.3.1976 a reference was made to the Valuation Officer Unit-IV, Income-tax Department, Rajkot, asking him to determine and report the fair market value of the property in question. The Valuation Officer submitted his report on 7.5.76 estimating the fair market value of the property in question at Rs.1,76,300/ 2.6 The proclamation of the substance of the notice in the locality in which the property in question was situated as contemplated under rule 48E of the Income-tax rules and affixture of a copy of the notice on the property in question was made on 10.5.76. A copy of the notice was affixed on the office notice board on 30.4.1976. 2.7 The transferors, transferee and the tenants in occupation submitted their respective objections on 26.5.1976, 29.5.76 & 31.5.76. 2.6 The proclamation of the substance of the notice in the locality in which the property in question was situated as contemplated under rule 48E of the Income-tax rules and affixture of a copy of the notice on the property in question was made on 10.5.76. A copy of the notice was affixed on the office notice board on 30.4.1976. 2.7 The transferors, transferee and the tenants in occupation submitted their respective objections on 26.5.1976, 29.5.76 & 31.5.76. 2.8 The case was heard by the Competent Authority, who was of the opinion that actual rent at the time of sale of property was required to be taken into account and not the rent before twenty years and the question therefore of considering the standard rent did not arise. The only point which was required to be considered was regarding the rent which should be taken as standard rent and the capitalised value should be taken at 15 times or at 20 times. Since the property was actually let out to the tenants except for one room, in the opinion of the Competent Authority, the question of taking any other rent did not arise. In fact, he noticed that the tenants were there though for long time they had not gone for standard rent either when the transferor was the owner or subsequently when the transferee had purchased the property. 2.9 The Competent Authority was therefore satisfied that the property in question was admittedly of a fair market value exceeding Rs. 25,000/- and therefore the value of the property in question exceeded the apparent consideration by more than 15% and that the consideration for such transfer as agreed to between the parties had not been truly C/FA/1467/1979 JUDGMENT stated in the instrument of transfer with such object as is referred to in clause (a) or clause (b) of sub-section I of section 269-6. He accordingly ordered the property to be acquired under the provisions of chapter XXA of the Act. 2.10 Aggrieved by the said order dated 12.6.1978 of the Competent Authority under section 269-F (b) both the transferors and the transferee filed respective appeals before the Appellate Tribunal. 3.The Tribunal, by the impugned order, has set-aside the order passed by the competent authority. 4.Mrs. Mauna Bhatt, the learned Senior Standing Counsel for the appellant has assailed the impugned judgment and order on the grounds stated in the memorandum of appeal. 5.A perusal of the impugned order passed by the Tribunal reveals that the Tribunal has referred to the principles laid down by the jurisdictional High Court in the case of CIT v. Vimlaben Bhagwandas Patel, (1979) 118 ITR 134, and has computed fair market value of the property in question and come to the conclusion that the fair market value of the property would be Rs.73,500/-. Thus, all that the Tribunal has done is that it has applied the decision of the jurisdictional High Court to the facts of the case. Under the circumstances, the impugned order passed by the Tribunal cannot be said to suffer from C/FA/1467/1979 JUDGMENT any legal infirmity so as to give rise to any question of law. The appeals, therefore, fail and are accordingly, dismissed. Sd/-(HARSHA DEVANI, J) GIRISH Sd/-(A. S. SUPEHIA, J)