Delhi High Court
R.S. Company vs Appropriate Authority And Ors. on 21 December, 2001
Equivalent citations: 2002IVAD(DELHI)412, 96(2002)DLT509
Author: S.B. Sinha
Bench: S.B. Sinha, A.K. Sikri
JUDGMENT S.B. Sinha, C.J.
1. This writ petition is directed against an order dated 22nd March 1995 passed by Deputy Commissioner of Income-tax, being the appropriate authority, in terms of Section 269UD(1) of the Income-tax Act.
2. The said authority had directed purchase of land said to be agricultural property by the Central Government bearing Khewat No.11, Khata No. 13, Rect. No.14, Kila Nol. 4/2 (2-16) Kila No. 5(8-0), measuring 26 kanal 16 marlas (3.35 acres) situated in the revenue state of village Fatehpur, Tehsil and district Gurgaon with electric connection, tubewell and one room and trees etc. According to the petitioner, the respondents No. 3 and 4 herein, are owners of the said land. It is contended that the said property was the ancestral property of the afore-mentioned respondents. By agreement dated 28th November 1984, the said respondents entered into an agreement to sell the said property, consideration whereof was fixed at the rate of Rs. 20,000/- per acre, amounting to a total consideration of Rs. 68 lakhs inclusive of tubewell, electric connection and one room, fridge etc. Respondent No. 3 and 4, in terms of Rule 48-L of the Income -tax Rules, 1962, filed a statement of transfer of subject property as required in form 37-I together with the said agreement. It was contended that the land in question is agricultural land.
3. A show cause notice dated 15th March 1995 was issued upon the petitioner as also the respondent No. 3 and 4 asking them to file various documents/information relating to the said property. The said show cause notice reads thus:
"Dear Sirs, I am directed by the appropriate authority, Delhi to state as under:-
2. Statement in form No. 37-I under Rule 48-L of the Income Tax Rule, 1962 has been filed on 6-12-94 in respect of immovable property/agricultural land at Fetehpur Tehsil & District Gurgaon. This statement is signed by the transferors, Svs. Jage Ram and Om Prakash and by Sanjeev Kumar, authorized signatories for M/s. R.S/ & Co., as transferees. The apparent consideration disclosed is Rs.
68,00,000/-. It is also claimed that the apparent consideration includes the cost of tubewell of Rs. One lac and the balance amount represents the value of agricultural land at the rate of Rs. 20 lac per acre.
3. The subject property is situated in the heart of Malibu Township, Gurgaon, which has been recently developed. The subject property is having existing public roads on three sides. It is also surrounded by the developed residential flats of Malibu Town. It is also surrounded by the developed residential flats of Malibu Town. It is learnt that the whole area has now been declared as residential, even though the subject property is claimed to be in agricultural land.
4. The value of the subject property as disclosed is considered low if similar other sale instances of properties are considered. The Sale price of plots exceeding 800 sq. mtrs. of Malibu Town which are very close to the subject property is above Rs. 2,500/- per sq. mtr. The property is of 3.35 Acres of 16214 sq. yds. If 20% area is left out for the roads etc. (say 3243 sq. yds), the balance available area will be 12971 sq. yds. or 10849 sq. mtrs. The value of such area @ Rs. 2,500/- per sq. mtr. comes to 10849 x 2500 = Rs. 2,71, 22,500/-. If an amount of Rs. 24,32,000/- being development charges @ Rs. 150 per sq. yd. for the entire area of 16214 sq. yds. is deducted, the net value comes to Rs. 2,71,22,500/- minus 24,12,000/- = Rs. 2,46,90,500/-. If the value of tubewell of Rs. 1 lac in added, the total value comes to Rs.
24690500/- + Rs. 1 lac = Rs. 2,47,90,500/- as against t he apparent consideration disclosed at Rs. 68,00,000/-.
5. Your attention is also invited to the sale of agricultural land in the neighborhood, which are situated at a much inferior location. The sale deed for Rs. 6,69,375/- has been registered on 17-2-1995 in respect of a small portion of lands as killa 4/24/1-25. This sale instance property consisted of 3 Kanals, 3 marlas and was sold at the rate of Rs. 17 lac per acre. On the basis of this sale instance, the value of the subject property could be assessed by enhancing the value at least by 100% of this sale instance because of better location of the subject property. On this basis, the rate of the subject property will come Rs. 17 Lac = Rs. 17 Lac = Rs. 34 Lac per acre and the value works out to Rs.
34,00,000/- x 3.35 = Rs. 1,13,90,000/-. If the value of tubewell of Rs. 100000/- is further added, the total value of the subject property comes to Rs. 1,14,90,000/- as against the apparent consideration of Rs. 68,00,000/-.
6. You are hereby given an opportunity of being heard in this matter and to show cause as to why pre-emptive purchase order under Section 269UD (1) of the I.T. Act should not be made. For this purpose, you may appear before the appropriate authority on 21-3-1995 at 10.30 AM either personally or through your authorized representative. You are also requested to produce before the Appropriate Authority on the aforesaid date and time the original title deed of the property together with photocopies thereof for verification and return. In case of failure to arrange representation on the aforesaid date and time, necessary orders will be passed in accordance with law on the basis of material already available on record without any further reference to you.
yours faithfully, Sd/-
(S.L. Kanaugia) Income Tax Officer O/O A.A. Delhi"
4. The petitioner filed a detailed reply vide letter dated 21st March 1995 wherein, inter alia, it had been contended:
(i) That opportunity of being heard as provided by Section 269UD (IA) w.e.f. 17.11.1992, as held by Supreme Court in C.B. Gautam v. Union of India, 1992 65 Textment page 440, was not reasonable as specification of comparable Agricultural plot were not furnished other relevant date/reasons which have prevailed in taking the proposed action was also not furnished.
(ii) That as per bye-laws the appropriate land authority requires a minimum of 10 acres of land for changing the use of the land from agricultural to residential and the subject property measures only 3.35 acres thus its status cannot be changed from agricultural to residence purposes, so the sale instance of the land of Malibu Estate (Being residential and developed) cannot be compared with the subject property while computing the valuation of the subject property.
(iii) That even if (for the purposes of arguments) it were to be assumed that the subject property was comparable to the sale instance of the residential land of Malibu estate and is thus at the rate of Rs.
2,500/- per square meter then after paying the relevant external and development charges, the value of the subject property after calculation would be Rs. 17,30,00/- which is still far less than the value art which the subject property has been purchased.
(iv) That while comparing the sale instance of other agricultural land with the subject property, the respondent authority cited the example of land registered on 17.2.95 i.e. after 2-1/2 months of purchase of subject property and that too of the rate of Rs. 17 lacs per acres which was much less than Rs. 20 lacs at which the subject property was registered.
(v) That the owner of Malibu Township have purchased the land adjoining their township in the last four months at the rate of Rs. 10 lacs to 16 lacs per acres and the NOC has been granted by the Income Tax Authority to them. Whereas the subject property was purchased, that the value of Rs. 20 lacs per acre prior to the purchase by the owners of Malibu Township."
5. The appropriate authority, however, considered the said land to be residential one of Malibu Township and rejected the submissions that the value of the subject matter of the property cannot exceed Rs. 68 lakhs. In terms of the said. order, the valuation of the land was fixed at Rs. 2,500/- per sq. metre.
6. Mr. K.K. Aggarwal, learned counsel appearing on behalf of the petitioner would submit that the respondents had wrongly proceeded on the basis that the lands in question are not agricultural lands. According to the learned counsel, there had been no conversion of the said land and in any event, having regard to the statutory provisions, 10 acres of land is required for constructing commercial building complex. The learned counsel would urge that the area of the said laid in 3.35 acres and contended that having regard to the fact that 45% thereof is to be left out for the roads, the value thereof should not be taken for computation purpose.
7. It was further urged that the respondent authority failed to apply its mind that even if for the sake of arguments, it is treated that the subject property is the residential land, the value of the land after paying the external and internal development charges should be Rs. 17,30,000/- as per the following calculations:-
"Total Land : 3.35 acres or 16214 square yards or 13561 square meters.
45% left out for the roads = 6102 square meters (as per the laws of land authority, 45% area must be left for roads etc. Balance 55% (13561-6102) = 7459 square meters.
The total value of the land at the rates mentioned by the respondent authority of Rs. 2,500/- per square meter will be Rs. 1,86,47,500/-.
Less development charges being paid to the land authority.
(a) External Development charges @ Rs. 34 lacs per acre.
(b) Internal Development charges @ Rs. 16.50 lakhs per acre.
Total charges payable to land authority would be Rs. 50.50 lacs i.e. (34.00 + 16.50) lacs x 3.35 acres = Rs. 1,69,17,500/-.
The value of the land comes out to be Rs. 1,86,47,500.00 Rs. 1,69,17,500.00 Rs. 17,30,000.00 Thus the value of Rs. 17,30,000/- is still over than the consideration at which the subject property has been purchased."
8. Mr. R. D. Jolly, learned counsel appearing on behalf of respondents No.1 and 2 would submit that the jurisdiction of this court in a matter of this nature is limited. He would contend that the appropriate authority had arrived at finding of fact as regards the value of the land upon compliance of the principles of natural justice and, thus, the same cannot be interfered with.
9. The learned counsel would, therefore, contend that no cause for judicial review under Article 226 of the Constitution of India has been made out. Our attention has been drawn to the fact that before passing the said order the sale instances had been taken into consideration. It has further been stated that the documents filed as Annexure P/5 to the writ petition had never been placed on record by the petitioner before the appropriate authority. He would urge that even no NOC had been issued by the appropriate authority in relation to the said sale instances cited in Annexure P/5 which pertain to sale of less than worth Rs. 10 lakhs. In the said order, the appropriate authority has found that the land in question is situated in the heart of the Malibu Town. The learned counsel would contend that the only 20% of the area has to be left out for roads.
Having regard to the decision of the apex court in C.B. Gautam v. Union of India and Ors., (1993) 199 ITR 530, only 15 per cent of the area may not be taken into consideration for the purpose of computation of the value thereof. Thus, according to the learned counsel, even if the lands are to be considered to be agricultural in nature, no case has been made out for interference with the impugned order.
10. Learned counsel appearing on behalf of respondents No. 3 and 4, on the other than, would submit that for the last six years, his client had not received any consideration and as such, he prays for invocation of equity jurisdiction of this court os that a direction can be issued for payment of interest as also the enhancement in value of the land which had taken place.
11. The judicial review jurisdiction of this court is limited. In Brindco Sales Ltd. v. Appropriate Authority and Ors., (2001) 248 ITR 465, having regard to the statutory preemptive right granted in favor of the Central Government in terms of Section 269-UD of the Income-tax Act, the apex court held that:
"Section 269UD has no conditions precedent except to the extent that property is situated in an area to which the Chapter is applicable, and a statement has been received in respect thereof. A pre-emptive right has been bestowed by Section 269UD, on the authority having jurisdiction over the area where the property is situated to make an outright final order of purchase by the Central Government of such immovable property at an amount equal to the amount of apparent consideration as per the statement submitted to it under Section 269UC. The action in question does not depend upon any special circumstance. Use of the expression "notwithstanding anything contained in any other law or any instrument or any agreement for the time being in force" makes the position crystal clear. It is a pre-emptive right based on State prerogative, which reigns supreme over those of individuals. But the powers have to be exercised within a limited time span. That is the statutory circumspection on the powers conferred under Section 269 UD. Section 269UD (IB) mandates recording of reasons specifying the ground on which it is made. This is a salutary provision as an act uninformed by reason is prima facie arbitrary. It is to be noted that Section 269UD as originally enacted did not contain Sub-section (1A) and (1B). They appear to have been introduced to get over the deficiencies pointed out by the apex court in C.B. Gautam v.
Union of India [1993] 199 ITR 530. But the earlier provision also warranted recording of reasons."
12. Dealing in details, the power of the court under Article 226 and 227 of the Constitution of India, it was held that the said power can be exercised in the following situation:
(i). Erroneous assumption or excess of jurisdiction.
(ii). Refusal to exercise jurisdiction.
(iii). Error of law apparent on the face of the records as distinguished from a mere mistake of law or error of law relating to jurisdiction.
(iv) Violation of the principles of natural justice.
(v) Arbitrary or capricious exercise of authority, or discretion.
(vi) Arriving at a finding which is perverse or based on no material.
(vii) A patent or flagrant error of procedure.
(viii) Order resulting in manifest injuries.
13. The case does not come within the purview of any of the afore-mentioned factors.
14. Even on the basis of the valuation of the land calculated at the rate of Rs. 2,500/- per sq. mtr., the entire value of the property of 16214 sq. mtr. would be Rs. 4,05,35,000/-. Having regard to the statutory provisions, the petitioner may be held to be entitled to 20% towards road and 15% for other purposes. Even then, the value of the land would be much more than Rs. 68,00,000/-. For the reasons mentioned herein before, no case is made out for interfering with the impugned order.
15. So far as the submission of respondent No. 3 and 4, is concerned that the amount in question had not been paid by the respondent in view of the interim order of status quo dated 18th April 1995 passed by this court which was made absolute on 22nd November 1995, this court also cannot grant any relief by way of interest and enhancement of the value of the land in the meantime in favor of the said respondents as the questions raised by them are not subject matter of the writ petition. Respondents No. 3 and 4, therefore, may take recourse to such remedies as may be available to them in law.
16. The petition is disposed of accordingly.