Delhi High Court
M.P. Poddar (Huf) & Anr. vs Appropriate Authority & Anr. on 17 September, 1999
Equivalent citations: 1999VIAD(DELHI)122, 81(1999)DLT812, 1999(51)DRJ305, [1999]240ITR372(DELHI)
Author: D.K. Jain
Bench: Arun Kumar, D.K. Jain
ORDER D.K. Jain, J.
1. In this petition under Article 226 of the Constitution of India, the petitioners, owners of house property bearing Flat No.402, Adishwar Apartments, 34 Feroz Shah Road, New Delhi, have challenged the order passed by the Appropriate Authority, respondent no.1 herein, on 31st December, 1997 in exercise of its powers under Section 269UD(1) of the Income Tax Act, 1961 (For short the Act), directing purchase of the said property by the Central Government. Though in the petition various reliefs, including the quashing of the purchase order, have been sought but during the course of motion hearing on 30th July, 1998, learned counsel for the petitioners had confined the challenge only to the deduction made by the Appropriate Authority from the amount payable to the petitioners in terms of Section 269UF by applying the principle of discounting as envisaged in Section 269UA(b) of the Act.
2. Shorn of elaborate details, the facts material for the purpose of this petition are as under:
3. The petitioners were owners of the aforementioned property. On 8th September, 1997 they entered into an agreement to sell the property to one M/s. Anantraj Industries Limited, respondent no.3 herein, for a total consideration of Rs.1 Crore. On execution of the agreement, the purchaser paid Rs.25 lakhs to the petitioners. The balance consideration of Rs.75 lakhs was to be paid within 15 days from the date of issuance of no objection certificate under Section 269UD(1) and the Income Tax Clearance Certificate (ITCC) in form 37-A under Section 230A of the Act. On filing of the statutory statement of transfer in Form No.37-I on 19th September, 1997, after issuing show cause notice to the transferor and transferee and affording hearing, vide order dated 31st December, 1997 the Appropriate Authority ordered the purchase of the said property by the Central Government. Since in terms of Clause 14 of the agreement to sell, the balance consideration of Rs. 75 lakhs was to be paid within 15 days from the date of issuance of no objection certificates in Form Nos. 37-I and 34-A, the Appropriate Authority discounted apparent consideration as per rule 48-I of the Rules framed under Chapter XX-C and determined the total consideration for the sale of the property at Rs. 96,87,500/- as against the consideration of Rs.1 Crore, reflected in the agreement. Discounted consideration was worked out by discounting the balance consideration of Rs.75 lakhs from the date of the agreement i.e. 8th September, 1997 to 15th March, 1998, on the Premise that the ITCC in Form 34-A would be issued after since sixty days from the date of order under Section 169UD(1) i.e. 31st December, 1997 and thus, the balance consideration would be due to the paid to the petitioners only on 15th March, 1998 i.e. 15 days from the date of issue of ITCC. Hence the present petition.
4. In the writ petition, as also before us, it is not seriously disputed by the petitioners that the Appropriate Authority was entitled to apply the principle of discounting envisaged in Section 269UA(b) as the payment of the entire sale consideration in terms of the agreement to sell was not to be made on the date of agreement but 75% of it was to be paid on a future date. But the grievance is that the doctrine of discounting should have been applied only for the period commencing from the date of actual payment by the Central Government in terms of Section 269UF and ending with the date of payment prescribed in the agreement to sell.
5. We have heard Mr. M.S. Syali, learned counsel for the petitioner and Mr. R.D. Jolly, learned counsel for the Appropriate Authority.
6. Chapter XX-C of the Act deals with purchase by Central Government of immovable properties in certain cases of transfer. Section 269UC, inter alia, provides that immovable property of such value exceeding Rs.50 lakhs shall not be transferred except after an agreement for transfer is entered into between the person who intends transferring the immovable property and the person to whom it is proposed to be transferred at least four months before the intended date of transfer and an application by the transferor and the transferee is filed in Form 37-I before the Appropriate Authority before the expiry of 15 days from the date on which the agreement for transfer is entered into. Section 269UD postulates that the Appropriate Authority, on receipt of the statement in Form 37-I, may make an order for the purchase by the Central Government of such immovable property for an amount equal to the amount of apparent consideration. Section 269UE provides that where an order is made by the Appropriate Authority for purchase by the Central Government, then the property shall vest in the Central Government on the date of such order in terms of the agreement for transfer, referred to in sub section 1 of section 269UC. Section 269UF provides that when an order of purchase is made, the Central Government shall tender by way of consideration for such purchase an amount equal to the amount of apparent consideration to the person entitled thereto in terms of Section 269UG within a period of one month from the end of the month in which the immovable property vests in Central Government. Failure to tender the Whole or part of the said amount results in abrogation of the purchase order and revesting of the property in the transferor. As noticed above, sub section 1 of Section 269UF of the Act provides that where an order of purchase is made, the Central Government shall pay, by way of consideration for such purchase, an amount equal to the amount of "apparent consideration". The "apparent consideration" is defined under Section 269UA(b) of the Act and the relevant portion thereof reads as under:
(b) "apparent consideration"-
(1) in relation to any immovable property in respect of which an agreement for transfer is made, being immovable property of the nature referred to in sub-clause (i) of clause (d), means-
(i) if the immovable property is to be transferred by way of sale, the consideration for such transfer as specified in the agreement for transfer;
(ii) xxxxxxxxxxxxxxx
(iii) xxxxxxxxxxxxxxx and where the whole or any part of the consideration for such transfer is payable on any date or dates falling after the date of such agreement for transfer, the value of the consideration payable after such date shall be deemed to be the discounted value of such consideration, as on the date of such agreement for transfer, determined by adopting such rate of interest as may be prescribed in this behalf;"
7. Rule 48-I of the Income Tax Rules, 1962 provides that the rate of interest for determination of the discounted value of consideration under sub clause (1) or sub clause (2) of Clause (b) of Section 269UA shall be 8% per annum.
8. We are required to construe the expressions "apparent consideration".
9. From a plain reading of the definition of apparent consideration it is clear that when a property is to be transferred by way of sale, the consideration for such transfer, as specified in the agreement for sale, would be the apparent consideration but where the whole or any part of the consideration for such transfer is payable subsequent to the date of the agreement, then the value of consideration payable after the date of agreement is to be discounted. The principle of discounting has been incorporated in Chapter XX-C to adjust the advantage of payment which accrues to a transferor on account of payment in present of what is due in future. According to the scheme of the said Chapter, even though the agreement between the parties provides for deferred payment of consideration for transfer but it has been made obligatory for the Central Government to tender the entire consideration within the stipulated period i.e. within a period of one month form the end of the month in which the moveable property vests in the Central Government, namely, on the date of purchase order and failure to tender the consideration within the said period results in abrogation of the said order. In other words, though under the agreement payment to transferor is deferred but by virtue of the purchase order the transferor receives payment within a fixed period, gaining an advantage of payment which, according to terms of agreement was due to be received by him on some future date.
10. As noted above, there is not dispute that as per the agreement to sell 75% of the sale consideration wa to be paid to the petitioners within 15 days of the receipt of ITCC and no-objection certificate under Chapter XX-C and, therefore, the value of the balance consideration payable after the date of agreement had to be determined on the discounted value. The stand of the petitioners is that discounting has to be with reference to the date of payment under Section 269UF and not with reference to the date of agreement as has been done by the Appropriate Authority in the instant case. We are unable to agree.
11. The latter part of the definition of apparent consideration in Section 269UA(b) in clear terms lays down that where the whole or any part of the considerations for such transfer is payable on any date or dates following date of such agreement for transfer, the value of consideration payable after such date shall be deemed to be the discounted value of such consideration, as on the date of such agreement for transfer determined by adopting such rate of interest as may be prescribed in this behalf. From the plain reading of the said provision it is clear that where the payment of any part of the consideration, as mentioned in the agreement to sell, is deferred to a future date, the value of such consideration payable after the said agreed between the parties on the execution of the agreement is, by statutory fiction, deemed to be the discounted value of such deferred consideration, as on the date of such agreement for transfer to be determined by adopting the rate of interest prescribed in Rule 48-I. This is a clear mandate of the legislature and there is no reason why we would depart from applying the fundamental rule of construction of a taxing statute that the meaning and intention of a statute must be gathered from the plain and unambiguous expression used therein rather than to find out what is just or expedient.
12. In Polestar Electronic (Pvt.) Limited Vs. Additional Commissioner Sale Tax and Anr., (1978) 41 STC 409, the Supreme Court observed that if there is one principle of interpretation more well settled than any other, it is that a statutory enactment must ordinarily be construed according to the plain natural meaning of its language and that no words should be added, altered or modified unless it is plainly necessary to do so in order to prevent a provision from being unintelligible, absurd, unreasonable, un-workable or totally irreconcilable with the rest of the statute. While laying down the correct rule of interpretation in the case of a fiscal statute, in Cape Brandy Syndicate Vs. Inland Revenue Commissioners, (1921) 1 KB 64 at 71, Rowlatt, J said, "in a taxing Act one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used". This classic statement still holds the field. We feel that the plain meaning assigned by us to the latter part of section 269UA(b) of the Act does not lead to any of the exceptions carved out in Polestar's case (Supra).
13. We are, therefore, of the considered view that having regard to the definition of apparent consideration in Section 269UA(b), the discounting of the value of consideration payable to the transferor under Section 269UF of the Act, has to be done from the amount of consideration, payment whereof is deferred, right from the date of the agreement of sale and not from the date on which either the order under Section 269UD(1) is passed or payment is tendered to the transfer, as contended by Mr. Syali, learned counsel for the petitioners.
14. We are fortified in our view by a decision of the Gujarat High Court in Pradip Ramanlal Sheth Vs. Union of India & Ors (1993) 204 ITR 866 and of the Allahabad High Court in Manik Chand Sethia Vs. Union of India & Ors. (1997) 226 ITR 411. With great respect, we find it difficult to subscribe to the view taken by the Bombay High Court in Srichand Raheja & Anr. Vs. S.C. Prasad (Appropriate Authority) and Ors. (1995) 213 ITR 33, inter alia, holding that the expression "as on the date of such agreement for transfer" refers only to the expression of "such consideration" appearing earlier and not to the discounted value; the date of agreement for transfer is relevant only for the purpose of ascertaining the fair market value by the Appropriate Authority; it has no relation to the date of determination of the discounted value and, therefore, the discounted value is to be determined with reference to the date of payment under Section 269UG(1) of the Act and not with reference to the date of the agreement.
15. In view of the foregoing discussion, we do not find any infirmity in the order of the appropriate Authority determining the discounted value of the apparent consideration payable to the petitioners at Rs.96,87,500/-. There is no merit in the petitioner and the same is accordingly dismissed. Rule is discharged. However, in the facts and circumstances of the case, there will be no order as to costs.